The Siam Cement Public Company Limited and its...

The Siam Cement Public Company Limited and its Subsidiaries

Consolidated financial statements for the year ended 31 December 2014

and Independent auditor’s report

Independent auditor’s report

To the Shareholders of The Siam Cement Public Company Limited I have audited the accompanying consolidated financial statements of The Siam Cement Public Company Limited and its subsidiaries (the “Group”), which comprise the consolidated statement of financial position as at 31 December 2014, the consolidated income statement, statement of comprehensive income, changes in shareholders’ equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Thai Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility My responsibility is to express an opinion on these consolidated financial statements based on my audit. I conducted my audit in accordance with Thai Standards on Auditing. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

2

Opinion In my opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2014 and its financial performance and cash flows for the year then ended in accordance with Thai Financial Reporting Standards. (Winid Silamongkol) Certified Public Accountant Registration No. 3378 KPMG Phoomchai Audit Ltd. Bangkok

19 February 2015


Consolidated statement of financial position

As at 31 December 2014

Assets Note 2014 2013

(Restated)

Current assets

Cash and cash equivalents 9 19,030,720 17,433,924

Temporary investments 9 8,022,501 6,984,018

Trade and other receivables 6, 7 51,842,109 49,452,765

Short-term loans to related parties 6 114,699 146,427

Inventories 8 52,747,012 55,556,928

Other current assets 6,240,690 5,555,669

Total current assets 137,997,731 135,129,731

Non-current assets

Available-for-sale investments 9 8,384,729 11,137,412

Investments in associates 10 77,309,823 74,842,728

Investments in jointly-controlled entities 10 5,038,613 4,345,624

Other long-term investments 11 3,078,406 3,478,582

Long-term loans to related parties 6 149,338 142,667

Investment properties 12 1,635,596 1,534,834

Property, plant and equipment 13 205,085,276 183,841,748

Goodwill 14 10,799,347 10,300,497

Intangible assets 14 7,043,662 6,278,488

Deferred tax assets 15 4,261,412 4,603,933

Other non-current assets 16 5,038,695 5,052,229

Total non-current assets 327,824,897 305,558,742

Total assets 465,822,628 440,688,473

(in thousand Baht)

The accompanying notes are an integral part of these financial statements.

3




Liabilities and shareholders' equity Note 2014 2013

(Restated)

Current liabilities

Bank overdrafts and short-term loans

from financial institutions 17 12,509,436 12,917,209

Trade and other payables 6 45,080,296 51,211,096

Current portion of long-term debts 18 8,138,751 5,916,323

Current portion of debentures 19 24,884,734 14,962,863

Short-term loans from related parties 6 89,615 88,093

Income tax payable 2,025,076 2,596,077

Other current liabilities 2,789,640 2,100,495

Total current liabilities 95,517,548 89,792,156

Non-current liabilities

Long-term debts 18 24,218,962 27,372,766

Debentures 19 126,207,074 126,174,178

Deferred tax liabilities 15 2,366,208 2,785,214

Employee benefit liabilities 20 6,330,655 6,122,785

Other non-current liabilities 21 1,865,147 1,679,722

Total non-current liabilities 160,988,046 164,134,665

Total liabilities 256,505,594 253,926,821

(in thousand Baht)


4




Liabilities and shareholders' equity Note 2014 2013

(Restated)

Shareholders' equity

Share capital

Authorised share capital 22 1,600,000 1,600,000

Issued and paid-up share capital 22 1,200,000 1,200,000

Retained earnings

Appropriated

Legal reserve 23 160,000 160,000

General reserve 10,516,000 10,516,000

Unappropriated 174,573,404 155,777,015

Other components of equity (9,166,354) (6,114,683)

Total equity attributable to owners of the parent 177,283,050 161,538,332

Non-controlling interests 32,033,984 25,223,320

Total shareholders’ equity 209,317,034 186,761,652

Total liabilities and shareholders' equity 465,822,628 440,688,473

(in thousand Baht)


5


Consolidated income statement

For the year ended 31 December 2014

Note 2014 2013

Revenue from sales 6 487,545,097 434,251,224

Cost of sales 6 (409,431,192) (363,096,020)

Gross profit 78,113,905 71,155,204

Other income 6, 25 9,923,696 13,140,941

Profit before expenses 88,037,601 84,296,145

Selling expenses 26 (17,312,833) (15,598,200)

Administrative expenses 27 (27,639,215) (24,434,400)

Total expenses (44,952,048) (40,032,600)

Profit from operations 43,085,553 44,263,545

Share of profit of associates and jointly-controlled entities 6,108,455 6,546,316

Profit before finance costs and income tax expense 49,194,008 50,809,861

Finance costs 29 (7,266,427) (8,193,177)

Profit before income tax expense 41,927,581 42,616,684

Income tax expense 30 (4,967,683) (5,003,241)

Profit for the year 36,959,898 37,613,443

Profit attributable to

Owners of the parent 33,615,327 36,522,249


36,959,898 37,613,443

Basic earnings per share (in Baht)

Attributable to owners of the parent 31 28.01 30.44

(in thousand Baht)


6


Consolidated statement of comprehensive income


Note 2014 2013


Other comprehensive income

Foreign currency translation differences (429,875) (663,968)

Gains (losses) on remeasuring available-for-sale investments 9 (2,078,444) 169,349

Defined benefit plan actuarial gains (losses) 20 99,833 (27,727)

Share of other comprehensive income of associates

and jointly-controlled entities (391,995) 176,558

Income tax on other comprehensive income 30 412,276 3,656

Other comprehensive income for the year,

net of income tax (2,388,205) (342,132)

Total comprehensive income for the year 34,571,693 37,271,311

Total comprehensive income attributable to

Owners of the parent 31,348,368 36,196,697


34,571,693 37,271,311

(in thousand Baht)


7


Consolidated statement of changes in shareholders' equity


Other components of equity

Changes in ownership

Retained earnings Other comprehensive income interests in

Appropriated Unappropriated Gains (losses) on Share of other subsidiaries / associates Total equity

Issued and Currency remeasuring comprehensive that do not result in attributable to Non- Total

paid-up Legal General translation available-for-sale income a loss of control or owners of controlling shareholders’

Note share capital reserve reserve differences investments of associates significant influence the parent interests equity

(in thousand Baht)

Balance at 1 January 2013 - as reported 1,200,000 160,000 10,516,000 137,500,107 (2,454,532) 2,312,296 (174,769) (5,872,996) 143,186,106 17,936,553 161,122,659

Impact of changes in accounting policies 3 - - - (253,420) - - - - (253,420) (7,033) (260,453)

Balance at 1 January 2013 - restated 1,200,000 160,000 10,516,000 137,246,687 (2,454,532) 2,312,296 (174,769) (5,872,996) 142,932,686 17,929,520 160,862,206

Transactions with owners, recorded directly

in shareholders’ equity

Contributions by and distributions to

owners of the parent

Dividends 33 - - - (17,922,013) - - - - (17,922,013) (722,536) (18,644,549)

Total contributions by and distributions to

owners of the parent - - - (17,922,013) - - - - (17,922,013) (722,536) (18,644,549)

Changes in ownership interests in subsidiaries / associates

Acquisition and increase in capital of

non-controlling interests without a change

in control or significant influence - - - - - - - 330,962 330,962 5,510,709 5,841,671


non-controlling interests with a change

in control or significant influence - - - - - - - - - 1,431,013 1,431,013

Total changes in ownership interests in subsidiaries / associates - - - - - - - 330,962 330,962 6,941,722 7,272,684

Total transactions with owners, recorded directly

in shareholders’ equity - - - (17,922,013) - - - 330,962 (17,591,051) 6,219,186 (11,371,865)

Comprehensive income for the year

Profit or loss - - - 36,522,249 - - - - 36,522,249 1,091,194 37,613,443

Other comprehensive income - - - (69,908) (639,742) 160,213 223,885 - (325,552) (16,580) (342,132)

Total comprehensive income for the year - - - 36,452,341 (639,742) 160,213 223,885 - 36,196,697 1,074,614 37,271,311

Balance at 31 December 2013 1,200,000 160,000 10,516,000 155,777,015 (3,094,274) 2,472,509 49,116 (5,542,034) 161,538,332 25,223,320 186,761,652

The accompanying notes are an integral part of these financial statements.8


Consolidated statement of changes in shareholders' equity


Other components of equity

Changes in ownership

Retained earnings Other comprehensive income interests in

Appropriated Unappropriated Gains (losses) on Share of other subsidiaries / associates Total equity

Issued and Currency remeasuring comprehensive that do not result in attributable to Non- Total

paid-up Legal General translation available-for-sale income a loss of control or owners of controlling shareholders’

Note share capital reserve reserve differences investments of associates significant influence the parent interests equity

(in thousand Baht)

Balance at 1 January 2014 - as reported 1,200,000 160,000 10,516,000 156,030,435 (3,094,274) 2,472,509 49,116 (5,542,034) 161,791,752 25,230,353 187,022,105

Impact of changes in accounting policies 3 - - - (253,420) - - - - (253,420) (7,033) (260,453)

Balance at 1 January 2014 - restated 1,200,000 160,000 10,516,000 155,777,015 (3,094,274) 2,472,509 49,116 (5,542,034) 161,538,332 25,223,320 186,761,652

Transactions with owners, recorded directly

in shareholders' equity

Contributions by and distributions to

owners of the parent

Dividends 33 - - - (14,955,629) - - - - (14,955,629) (908,028) (15,863,657)

Total contributions by and distributions to

owners of the parent - - - (14,955,629) - - - - (14,955,629) (908,028) (15,863,657)

Changes in ownership interests in subsidiaries / associates


non-controlling interests without a change

in control or significant influence - - - - - - - (648,021) (648,021) 4,127,386 3,479,365


non-controlling interests with a change

in control or significant influence - - - - - - - - - 367,981 367,981

Total changes in ownership interests in subsidiaries / associates - - - - - - - (648,021) (648,021) 4,495,367 3,847,346

Total transactions with owners, recorded directly

in shareholders' equity - - - (14,955,629) - - - (648,021) (15,603,650) 3,587,339 (12,016,311)

Comprehensive income for the year

Profit or loss - - - 33,615,327 - - - - 33,615,327 3,344,571 36,959,898

Other comprehensive income - - - 136,691 (327,507) (1,649,463) (426,680) - (2,266,959) (121,246) (2,388,205)

Total comprehensive income for the year - - - 33,752,018 (327,507) (1,649,463) (426,680) - 31,348,368 3,223,325 34,571,693

Balance at 31 December 2014 1,200,000 160,000 10,516,000 174,573,404 (3,421,781) 823,046 (377,564) (6,190,055) 177,283,050 32,033,984 209,317,034

The accompanying notes are an integral part of these financial statements.9


Consolidated statement of cash flows


2014 2013

(Restated)

Cash flows from operating activities


Adjustments for

Depreciation and amortisation 18,062,136 15,717,615

Interest income (794,609) (1,048,268)

Interest expense 8,000,328 7,503,526

Unrealised gain on foreign currency exchange (156,009) (49,778)

Allowance for decline in value of inventories 511,877 35,101

Dividend income (4,053,581) (4,893,978)

Employee benefit expense 691,480 754,533

Share of profit of associates and jointly-controlled entities (6,108,455) (6,546,316)

Income tax expense 4,967,683 5,004,031

Gain on revaluation of investments and others 218,737 (2,299,152)

Profit provided by operating activities before changes in

operating assets and liabilities 58,299,485 51,790,757

Decrease (increase) in operating assets

Trade and other receivables (1,302,861) (1,132,559)

Inventories 2,303,720 (4,460,030)

Other current assets (581,233) (479,239)

Other non-current assets (240,166) (12,993)

Net decrease (increase) in operating assets 179,460 (6,084,821)

(in thousand Baht)


10




Note 2014 2013

(Restated)

Increase (decrease) in operating liabilities

Trade and other payables (6,276,483) 2,446,500

Other current liabilities 575,532 (81,185)

Employee benefit liabilities (319,467) (329,848)

Other non-current liabilities (215,599) 247,564

Net increase (decrease) in operating liabilities (6,236,017) 2,283,031

Cash generated from the operations 52,242,928 47,988,967

Income tax paid (5,072,743) (5,491,330)

Net cash provided by operating activities 47,170,185 42,497,637

Cash flows from investing activities

Interest received 753,975 1,100,043

Dividends received 9,399,298 7,648,884

Temporary investments (1,045,966) 701,631

Available-for-sale investments (20,445,889) (11,582,711)

Investments in associates, jointly-controlled entities

and other companies (2,661,253) (11,049,588)

Net cash outflow on acquisition of subsidiaries 5 (1,111,881) (7,726,168)

Proceeds from sales and return of investments 21,652,134 13,249,707

Income tax paid from sales of investments - (10,656)

Purchases of property, plant and equipment (39,498,299) (28,914,001)

Proceeds from sales of property, plant and equipment 378,228 177,461

Purchases of intangible assets (1,206,330) (1,747,719)

Loans to related parties (5,516) (2,367)

Currency translation differences (304,155) (455,934)

Net cash used in investing activities (34,095,654) (38,611,418)

(in thousand Baht)


11




2014 2013

(Restated)

Cash flows from financing activities

Borrowings

Interest paid (8,240,016) (7,642,933)

Decrease in bank overdrafts and short-term loans

from financial institutions (455,204) (2,940,724)

Payments of short-term loans from related parties (54,870) (79,154)

Proceeds from long-term debts 8,578,412 8,398,285

Payments of long-term debts (8,218,923) (10,675,115)

Payments of finance lease (793,059) (691,347)

Proceeds from issuance of debentures 24,918,630 44,921,595

Redemption of debentures (14,963,863) (29,967,960)

Net increase in borrowings 771,107 1,322,647

Dividends paid

Dividends paid to owners of the parent (14,955,629) (17,922,013)

Dividends paid to non-controlling interests (885,820) (746,989)

Total dividends paid (15,841,449) (18,669,002)

Acquisition and increase in capital of non-controlling interests 3,592,607 5,830,217

Net cash used in financing activities (11,477,735) (11,516,138)

Net increase (decrease) in cash and cash equivalents 1,596,796 (7,629,919)

Cash and cash equivalents at beginning of the year 17,433,924 25,063,843

Cash and cash equivalents at end of the year 19,030,720 17,433,924

Supplementary information for cash flows

Non-cash transactions

Accrued dividend income 205,359 205,359

Outstanding payable from purchases of property, plant,

equipment and intangible assets 1,508,324 1,406,710

(in thousand Baht)


12

The Siam Cement Public Company Limited and its Subsidiaries Notes to the financial statements For the year ended 31 December 2014

13

Note Contents

1 General information

2 Basis of preparation of the financial statements

3 Change in accounting policies

4 Significant accounting policies

5 Acquisitions of business and changes of status to subsidiaries

6 Related parties

7 Trade and other receivables

8 Inventories

9 Cash and cash equivalents and other investments

10 Investments in associates and jointly-controlled entities

11 Other long-term investments

12 Investment properties

13 Property, plant and equipment

14 Goodwill and intangible assets

15 Deferred tax assets (deferred tax liabilities)

16 Other non-current assets

17 Bank overdrafts and short-term loans from financial institutions

18 Long-term debts

19 Debentures

20 Employee benefit liabilities

21 Other non-current liabilities

22 Share capital

23 Reserves

24 Business segment information

25 Other income

26 Selling expenses

27 Administrative expenses

28 Employee benefit expenses

29 Finance costs

30 Income tax

31 Basic earnings per share

32 Agreements

33 Dividends


14

Note Contents

34 Financial instruments

35 Commitments and contingent liabilities

36 Capital management

37 Other

38 Events after the reporting period

39 Thai Financial Reporting Standards (TFRSs) that have been issued but are not yet effective


15

These notes form an integral part of the consolidated financial statements.

The consolidated financial statements issued for Thai statutory and regulatory reporting purposes are prepared in the Thai and English languages, and were approved and authorised for issue by the audit committee, as appointed by the Board of Directors of the Company, on 19 February 2015.

1 General information

The Siam Cement Public Company Limited, the “Company”, is incorporated in Thailand and has its registered office at 1 Siam Cement Road, Bangsue, Bangkok 10800, Thailand.

The Company was listed on the Stock Exchange of Thailand on 25 April 1975.

The Company and its subsidiaries, the “Group”, is an industrial group which operates core businesses of SCG Cement-Building Materials, SCG Chemicals and SCG Paper.

Details of the Company’s subsidiaries, which have significant operations and were included in the consolidated financial statements, are as follows:

Direct /Indirect

Direct /Indirect

Holding (%) Holding (%)

SCG Cement-Building Materials SCG Cement-Building Materials

SCG Cement Co., Ltd. 100 The Concrete Products and Aggregate (Vietnam) Co., Ltd.

The Concrete Products and Aggregate Co., Ltd. 100 (Incorporated in Vietnam) 100

The Siam Cement (Kaeng Khoi) Co., Ltd. 100 CPAC Concrete Products (Cambodia) Co., Ltd.

The Siam Cement (Ta Luang) Co., Ltd. 100 (Incorporated in Cambodia) 100

The Siam Cement (Thung Song) Co., Ltd. 100 Silathai Sanguan (2540) Co., Ltd. 100

The Siam Cement (Lampang) Co., Ltd. 100 Cementhai Building Materials (Singapore) Pte. Ltd.

Khammouance Cement Co., Ltd. (Incorporated in Singapore) 100

(Incorporated in Laos) 100 SCG Building Materials Co., Ltd. 100

Siam Mortar Co., Ltd. 100 Cementhai Gypsum Co., Ltd. 100

The Siam White Cement Co., Ltd. 100 Thai Ceramic Holding Co., Ltd. 100

The Siam Refractory Industry Co., Ltd. 100 MRC Roofing Co., Ltd.

Cementhai Energy Conservation Co., Ltd. 100 (Formerly: Monier Roofing Co., Ltd.) 100

ECO Plant Services Co., Ltd. 100 The Siam Fibre-Cement Co., Ltd. 100

Siam Research and Innovation Co., Ltd. 100 The Fibre-Cement Products (Lampang) Co., Ltd. 100

SCI Eco Services Co., Ltd. 100 Tip Fibre-Cement Co., Ltd. 100

PT Pion Quarry Nusantara SCG Landscape Co., Ltd. 100

(Incorporated in Indonesia) 100 Siam Fiberglass Co., Ltd. 100

PT SCG Pipe and Precast Indonesia The CPAC Roof Tile Co., Ltd. 100

(Incorporated in Indonesia) 100 SCG Concrete Roof (Vietnam) Co., Ltd.

PT Semen Lebak (Incorporated in Vietnam) 100

(Incorporated in Indonesia) 100 SCG Roofing Philippines, Inc.

PT SCG Readymix Indonesia (Formerly: CPAC Monier Philippines, Inc.)

(Incorporated in Indonesia) 100 (Incorporated in the Philippines) 100

PT CPAC Surabaya SCG Concrete Roof (Cambodia) Co., Ltd.

(Incorporated in Indonesia) 100 (Formerly: CPAC Monier (Cambodia) Co., Ltd.)

Q Mix Supply Co., Ltd. 100 (Incorporated in the Cambodia) 100

CPAC Lao Co., Ltd. Thai Ceramic Roof Tile Co., Ltd. 100

(Incorporated in Laos) 100 Cementhai Ceramics Co., Ltd. 100


16

Direct /Indirect

Direct /Indirect



Cementhai Gypsum (Singapore) Pte. Ltd. Siam Cement Myanmar Trading Ltd.

(Incorporated in Singapore) 100 (Incorporated in Myanmar) 100

Cementhai Roof Holdings Philippines, Inc. SCG Logistics Management Co., Ltd. 100

(Incorporated in the Philippines) 100 SCG Logistics Management (Lao) Co., Ltd.

Cementhai Ceramic (Singapore) Pte. Ltd. (Incorporated in Laos) 100

(Incorporated in Singapore) 100 SCG Logistics Management (Cambodia) Co., Ltd.

Cementhai Ceramics Philippines Holdings, Inc. (Incorporated in Cambodia) 100

(Incorporated in the Philippines) 100 SCG Trading Services Co., Ltd. 100

Keating Capital Partners Pte. Ltd. Myanmar CBM Services Co., Ltd.

(Incorporated in Singapore) 100 (Incorporated in Myanmar) 100

Kitchener Limited SCG Sourcing Co., Ltd. 100

(Incorporated in China) 100 SCG Experience Co., Ltd. 100

Thai Ceramic Co., Ltd. 100 SCG Skills Development Co., Ltd. 100

The Siam Ceramic Group Industries Co., Ltd. 100 Buu Long Industry & Investment Joint Stock Company

Cementhai Home Services Co., Ltd. 100 (Incorporated in Vietnam) 99

Gemago Co., Ltd. 100 Kampot Cement Co., Ltd.

PT SCG Lightweight Concrete Indonesia (Incorporated in Cambodia) 97

(Incorporated in Indonesia) 100 PT KIA Serpih Mas

SCG Distribution Co., Ltd. 100 (Incorporated in Indonesia) 97

SCG Cement-Building Materials Co., Ltd. 100 PT KIA Keramik Mas

SCG Trading Co., Ltd. 100 (Incorporated in Indonesia) 96

SCG Trading Australia Pty. Ltd. PT Keramika Indonesia Assosiasi, Tbk.

(Incorporated in Australia) 100 (Incorporated in Indonesia) 96

SCG Trading Guangzhou Co., Ltd. PT Semen Jawa

(Incorporated in China) 100 (Incorporated in Indonesia) 95

SCG Trading Hong Kong Limited PT Kokoh Inti Arebama Tbk.

(Incorporated in China) 100 (Incorporated in Indonesia) 91

SCG Trading Philippines Inc. The Siam Sanitary Fittings Co., Ltd. 91

(Incorporated in the Philippines) 100 PT Tambang Semen Sukabumi

SCG Singapore Trading Pte. Ltd. (Incorporated in Indonesia) 91

(Incorporated in Singapore) 100 Sosuco and Group (2008) Co., Ltd. 90

SCG Trading USA Inc. Prime Group Joint Stock Company

(Incorporated in USA) 100 (Incorporated in Vietnam) 85

PT SCG Trading Indonesia Prime Trading, Import and Export One Member

(Incorporated in Indonesia) 100 Limited Liability Company

SCG Trading Vietnam Co., Ltd. (Incorporated in Vietnam) 85

(Incorporated in Vietnam) 100 Prime Materials Company Limited

SCG Trading Lao Co., Ltd. (Incorporated in Vietnam) 85

(Incorporated in Laos) 100 Ceramic Research Institution

SCG Marketing Philippines Inc. (Incorporated in Vietnam) 85

(Incorporated in the Philippines) 100 Prime International Im-Ex & Servicing Trading Co., Ltd.

SCGT Malaysia Sdn. Bhd. (Incorporated in Vietnam) 85

(Incorporated in Malaysia) 100 Prime Ngoi Viet Joint Stock Company

SCG Trading (Cambodia) Co., Ltd. (Incorporated in Vietnam) 85

(Incorporated in Cambodia) 100


17

Direct /Indirect

Direct

/Indirect Holding (%) Holding (%)


Prime Pho Yen Joint Stock Company Siam Sanitary Ware Industry Co., Ltd. 71

(Incorporated in Vietnam) 85 Siam Sanitary Ware Industry (Nongkae) Co., Ltd. 71

Prime Yen Binh Joint Stock Company Prime Tien Phong Joint Stock Company

(Incorporated in Vietnam) 85 (Incorporated in Vietnam) 71

Prime Truong Xuan Joint Stock Company MAWLAMYINE CEMENT LIMITED

(Incorporated in Vietnam) 85 (Incorporated in Myanmar) 70

Prime Mineral Joint Stock Company Quality Construction Products Public Company Limited 68

(Incorporated in Vietnam) 85 Q-Con Eastern Co., Ltd. 68

Saraburirat Co., Ltd. 83 SCGT Automobile Co., Ltd. 67

Mariwasa-Siam Ceramics, Inc. Prime Hoa Cuong Joint Stock Company

(Incorporated in the Philippines) 83 (Incorporated in Vietnam) 65

PT Surya Siam Keramik Prime Industrial Joint Stock Company

(Incorporated in Indonesia) 80 (Incorporated in Vietnam) 65

Myanmar CPAC Service Co., Ltd. Prime Vinh Phuc Joint Stock Company

(Incorporated in Myanmar) 80 (Incorporated in Vietnam) 65

Prime Dai Viet Joint Stock Company Guangxi SCG Logistics Co., Ltd.

(Incorporated in Vietnam) 77 (Incorporated in China) 55

Prime Thein Phuc Joint Stock Company Panel World Co., Ltd. 55

(Incorporated in Vietnam) 77 Sosuco Ceramic Co., Ltd. 54

Prime Phong Dien Joint Stock Company SCG-Sekisui Sales Co., Ltd. 51

(Incorporated in Vietnam) 77 MINGALAR MOTOR CO., LTD.

Prime Dai Thinh Joint Stock Company (Incorporated in Myanmar) 50

(Incorporated in Vietnam) 77 PT Siam-Indo Gypsum Industry

Prime Dai Loc Joint Stock Company (Incorporated in Indonesia) 50

(Incorporated in Vietnam) 76 PT Siam-Indo Concrete Products

CPAC Cambodia Co., Ltd. (Incorporated in Indonesia) 50

(Incorporated in Cambodia) 75 SCG Trading Emirates L.L.C.

Thai-German Ceramic Industry Public (Incorporated in the United Arab Emirates) 49

Company Limited 75 Kampot Land Co., Ltd.

Prime Dai An Joint Stock Company (Incorporated in Cambodia) 48

(Incorporated in Vietnam) 75 Prime Dai Quang Joint Stock Company

Prime Hop Thinh Joint Stock Company (Incorporated in Vietnam) 48

(Incorporated in Vietnam) 72 Prime Hao Phu Joint Stock Company

Siam Sanitary Ware Co., Ltd. 71 (Incorporated in Vietnam) 43

SCG Chemicals SCG Chemicals

SCG Chemicals Co., Ltd. 100 SCG Chemicals (Singapore) Pte. Ltd.

Thai Polyethylene Co., Ltd. 100 (Incorporated in Singapore) 100

SCG Plastics Co., Ltd. 100 Tuban Petrochemicals Pte. Ltd.

SCG Performance Chemicals Co., Ltd. 100 (Incorporated in Singapore) 100

Rayong Engineering and Plant Service Co., Ltd. 100 Hexagon International, Inc.

Protech Outsourcing Co., Ltd. 100 (Incorporated in USA) 100

RIL 1996 Co., Ltd. 100 C4 Holding Pte. Ltd.

Texplore Co., Ltd. 100 (Incorporated in Singapore) 100

Vina SCG Chemicals Co., Ltd. 100


18

Direct /Indirect

Direct

/Indirect Holding (%) Holding (%)

SCG Chemicals SCG Chemicals

PT TPC Indo Plastic & Chemicals Viet-Thai Plastchem Co., Ltd.

(Incorporated in Indonesia) 96 (Incorporated in Vietnam) 66

Rayong Pipeline Co., Ltd. 92 Alliance Petrochemical Investment (Singapore) Pte. Ltd.

Thai Plastic and Chemicals Public Company (Incorporated in Singapore) 65

Limited 91 TPC Vina Plastic and Chemicals Corporation Ltd.

TPC Paste Resin Co., Ltd. 91 (Incorporated in Vietnam) 63

The Nawaplastic Industries (Saraburi) Co., Ltd. 91 Siam Stabilizers and Chemicals Co., Ltd. 54

Nawa Plastic Industries Co., Ltd. 91 Flowlab & Service Co., Ltd. 51

Nawa Intertech Co., Ltd. 91 Norner Holding AS

Chemtech Co., Ltd. (Incorporated in Norway) 51

(Incorporated in Vietnam) 91 Norner AS

Total Plant Service Co., Ltd. 91 (Incorporated in Norway) 51

SCG ICO POLYMERS COMPANY LIMITED 87 Norner Research AS

Map Ta Phut Tank Terminal Co., Ltd. 82 (Incorporated in Norway) 51

Minh Thai House Component Co., Ltd. Norner IP AS

(Incorporated in Vietnam) 73 (Incorporated in Norway) 51

Map Ta Phut Olefins Co., Ltd. 67 Norner Verdandi AS

Rayong Olefins Co., Ltd. 67 (Incorporated in Norway) 51

Rayong Olefins (Singapore) Pte. Ltd. CO2 Technologies AS

(Incorporated in Singapore) 67 (Incorporated in Norway) 51

SCG Paper SCG Paper

SCG Paper Public Company Limited 98 Phoenix Utilities Co., Ltd. 75

Siam Kraft Industry Co., Ltd. 98 Thai Containers Group Co., Ltd. 69

United Pulp and Paper Co., Inc. Thai Containers Khonkaen Co., Ltd. 69

(Incorporated in the Philippines) 98 Thai Containers Rayong Co., Ltd. 69

Paperlink Inter-Trade Corporation Vina Kraft Paper Co., Ltd.

(Incorporated in the Philippines ) 98 (Incorporated in Vietnam) 69

InfoZafe Co., Ltd. 98 TCG Rengo (S) Limited

SCGP Excellence Training Center Co., Ltd. 98 (Incorporated in Singapore) 69

SCG Paper Energy Co., Ltd. 98 New Asia Industries Co., Ltd.

Thai Cane Paper Public Company Limited 92 (Incorporated in Vietnam) 69

Thai Paper Co., Ltd. 75 Alcamax Packaging (Vietnam) Co., Ltd.

Thai Union Paper Public Company Limited 75 (Incorporated in Vietnam) 69

Siam Cellulose Co., Ltd. 75 AP Packaging (Hanoi) Co., Ltd.

The Siam Forestry Co., Ltd. 75 (Incorporated in Vietnam) 69

Panas Nimit Co., Ltd. 75 Packamex (Vietnam) Co., Ltd.

Thai Panason Co., Ltd. 75 (Incorporated in Vietnam) 69

Thai Panadorn Co., Ltd. 75 TC Flexible Packaging Co.,Ltd. 69

Thai Panaram Co., Ltd. 75 PT Primacorr Mandiri

Suanpa Rungsaris Co., Ltd. 75 (Incorporated in Indonesia) 62

Siam Panawes Co., Ltd. 75 PT Indoris Printingdo

Thai Panaboon Co., Ltd. 75 (Incorporated in Indonesia) 62

Thai Wanabhum Co., Ltd. 75 Dyna Packs Co., Ltd. 52

Phoenix Pulp & Paper Public Company Limited 75 Orient Container Co., Ltd. 52


19

Direct

/Indirect Direct

/Indirect


SCG Paper SCG Paper

D-In-Pack Company Limited 52 Thai British Security Printing Public

Tawana Container Co., Ltd. 50 Company Limited 49

Thai British Depost Co., Ltd. 25

Other Other

Cementhai Holding Co., Ltd. 100 Siam Eco Energy Business Co., Ltd. 100

Cementhai Property (2001) Public Company Limited 100 SCG Learning Excellence Co., Ltd. 100

Property Value Plus Co., Ltd. 100 SCG VIETNAM CO., LTD.

SCG Accounting Services Co., Ltd. 100 (Incorporated in Vietnam) 100

SCG Legal Counsel Limited 100 PT SCG Indonesia

CTO Management Co., Ltd. 100 (Incorporated in Indonesia) 100

Cementhai Captive Insurance Pte. Ltd. Siam GNE Solar Energy Co., Ltd 50

(Incorporated in Singapore) 100

Details of the Company’s subsidiaries with insignificant operations or in the process of liquidation that were included in the consolidated financial statements are as follows:

Direct /Indirect

Direct /Indirect


The CPAC Ready Mixed Concrete SCG Corporation S.A.

(South) Co., Ltd. 100 (Incorporated in Panama) 100

SCG Holding Co., Ltd. 100 SCG Trading (Jordan) L.L.C.

The Nawaloha Foundry Bangpakong Co., Ltd. 100 (Incorporated in Jordan) 100

Bangsue Industry Co., Ltd. 100 Siam TPC Co., Ltd. 96

The Siam Iron and Steel Co., Ltd. 100 Siam TPC (Singapore) Pte. Ltd.

Dhara Pipe Co., Ltd. 100 (Incorporated in Singapore) 96

Siam Nawaphan Co., Ltd. 100 Myanmar CPAC Trading Co., Ltd.

Siam Paraffins Co., Ltd. 100 (Incorporated in Myanmar) 80

Most of the above subsidiaries were established in Thailand unless otherwise stated. There was no material change in the percentage of holding from 2013.

During 2014, the Group acquired the ordinary shares of Silathai Sanguan (2540) Co., Ltd., Panel World Company Limited, and D-In-Pack Company Limited which are incorporated in Thailand, Norner Holding AS which is incorporated in Norway, and PT Indoris Printingdo which is incorporated in Indonesia. These companies are included in the Group’s consolidated financial statements in 2014 as discussed in note 5.


20

2 Basis of preparation of the financial statements

(a) Statement of compliance

The consolidated financial statements are prepared in accordance with Thai Financial Reporting Standards (TFRSs); guidelines promulgated by the Federation of Accounting Professions (“FAP”); and applicable rules and regulations of the Thai Securities and Exchange Commission. The FAP has issued the following new and revised TFRSs that are relevant to the Group’s operations and are effective for annual accounting periods beginning on or after 1 January 2014: TFRSs Topic

TAS 1 (revised 2012) Presentation of Financial Statements TAS 7 (revised 2012) Statement of Cash Flows TAS 12 (revised 2012) Income Taxes TAS 17 (revised 2012) Leases TAS 18 (revised 2012) Revenue TAS 19 (revised 2012) Employee Benefits TAS 21 (revised 2012) The Effects of Changes in Foreign Exchange Rates TAS 24 (revised 2012) Related Party Disclosures TAS 28 (revised 2012) Investments in Associates TAS 31 (revised 2012) Interests in Joint Ventures TAS 34 (revised 2012) Interim Financial Reporting TAS 36 (revised 2012) Impairment of Assets TAS 38 (revised 2012) Intangible Assets TFRS 3 (revised 2012) Business Combinations TFRS 5 (revised 2012) Non-current Assets held for Sale and Discontinued Operations TFRS 8 (revised 2012) Operating Segments TFRIC 1 Changes in Existing Decommissioning, Restoration and Similar

Liabilities TFRIC 4 Determining whether an Arrangement contains a Lease TFRIC 10 Interim Financial Reporting and Impairment TFRIC 13 Customer Loyalty Programmes TIC 15 Operating Leases - Incentives TIC 27 Evaluating the Substance of Transactions Involving the Legal Form of

a Lease TIC 32 Intangible Assets-Web Site Costs The initial application of these new and revised TFRSs has no significant changes in the Group’s accounting policies, calculation method and financial performance or position. The impact affected to the consolidated financial statements as disclosed in note 3. In addition to the above new and revised TFRSs, the FAP has issued a number of new and revised TFRSs which are effective for annual financial periods beginning on or after 1 January 2015 and have not been adopted in the preparation of these consolidated financial statements. Those new and revised TFRSs are disclosed in note 39.


21

(b) Basis of measurement The consolidated financial statements have been prepared on the historical cost basis except for the following material items in the consolidated statement of financial position:

available-for-sale financial assets are measured at fair value; the present value of the defined benefit obligations.

(c) Functional and presentation currency The consolidated financial statements are prepared and presented in Thai Baht, which is the Company’s functional currency. All financial information presented in Thai Baht has been rounded in the notes to the financial statements to the nearest million unless otherwise stated.

(d) Use of estimates and judgements The preparation of consolidated financial statements in conformity with TFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which estimates are revised and in any future periods affected.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements is included in the following notes:

Note 5 Acquisition of business and change of status to subsidiaries Note 7, 8, 9, 10, 11, 12, 13 and 14 Measurement of the recoverable amounts of each asset and

cash-generating units containing goodwill Note 15 and 30 Utilisation of tax losses, current and deferred tax Note 20 Discount rate, salary increase rate, employee turnover rate

and mortality rate Note 35 Provisions and contingent liabilities

3 Change in accounting policies (a) Overview

From 1 January 2014, consequent to the adoption of new and revised TFRSs as set out in note 2, the Group has changed its accounting policy in area having an effect on the Group’s consolidated financial statements which is Accounting for arrangements containing a lease based on Thai Financial Reporting Interpretations Committee No.4 (TFRIC 4) - Determining whether an Arrangement contains a Lease. A description of the nature and effect of this change in accounting policy is included in note 3 (b) below:


22

(b) Accounting for arrangements containing a lease

Thai Financial Reporting Interpretations Committee No.4 (TFRIC 4) addresses arrangements that do not take the legal form of a lease, but convey rights to use items for agreed periods of time in return for a payment or series of payments. Thai Financial Reporting Interpretations Committee No.4 (TFRIC 4) provides guidance for evaluating whether such arrangements are, or contain, leases which should be accounted for under TAS 17 (revised 2012) Leases. If an agreement is determined to contain a lease, then Thai Financial Reporting Interpretations Committee No.4 (TFRIC 4) requires TAS 17 (revised 2012) to be applied to classify and account for the lease.

The Group adopted Thai Financial Reporting Interpretations Committee No.4 (TFRIC 4) with effect from 1 January 2014. The effects of the change are recognised retrospectively in the consolidated financial statements in 2013 as follows.

31 December 1 January 2013 2013

(in million Baht)Consolidated statement of financial position Increase in machinery and equipment under finance lease contract

253

303

Increase in deferred tax liabilities 12 11

Increase in liabilities under finance lease contracts 501 514

Decrease in retained earnings (253) (253)

Decrease in non-controlling interests (7) (7)

Decrease in total shareholders’ equity (260) (260)

During 2014, the Group had amended the contract. In this connection, the Group has reassessed and has determined that the contract not to longer certains a lease under TFRIC 4, resulting in the lease accounting would cease to apply since then.

4 Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements except as explained in note 3, which addresses changes in accounting policies.

(a) Basis of consolidation

The consolidated financial statements relate to the Group and the Group’s interests in associates and jointly-controlled entities.

Significant intra-group transactions between the Company and its subsidiaries are eliminated on consolidation.

Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group.

Losses applicable to non-controlling interests in a subsidiary are allocated to non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.


23

Associates and jointly-controlled entities

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds from 20% to 50% of the voting power of another entity.

Jointly-controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Investments in associates and jointly-controlled entities are accounted for in the consolidated financial statements using the equity method and are recognised initially at cost. The cost of the investment includes transaction costs. The consolidated financial statements include the Group’s share of profit or loss and other comprehensive income of associates and jointly-controlled entities on an equity accounted basis after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Group’s share of losses exceeds its interest in an equity accounted investee, the Group’s carrying amount of that interest is reduced to zero and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive an obligations or has made payments on behalf of the associate and jointly-controlled entity. Loss of control Upon the loss of control in subsidiary, the Group derecognises the assets and liabilities, any non-controlling interests and the other components of shareholder’s equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained. Business combinations The Group applies the acquisition method for all business combinations other than those with entities under common control. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that currently are exercisable. The acquisition date is the date on which control is transferred to the acquirer. Judgment is applied in determining the acquisition date and determining whether control is transferred from one party to another. Goodwill is measured as the fair value of the consideration transferred including the recognised amount of any non-controlling interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Group to the previous owners of the acquiree, and equity interests issued by the Group. Consideration transferred also includes the fair value of any contingent consideration and share-based payment awards of the acquiree that are replaced mandatorily in the business combination.


24

A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present obligation and arises from a past event, and its fair value can be measured reliably.

The Group measures any non-controlling interest at its proportionate interest in the identifiable net assets of the acquiree.

Transaction costs that the Group incurs in connection with a business combination, such as legal fees, and other professional and consulting fees are expensed as incurred.

(b) Cash and cash equivalents Cash and cash equivalents in the statement of cash flows comprise cash on hand, saving deposits, current deposits and highly liquid short-term investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. In addition, bank overdrafts that are repayable on demand are a component of financing activities for the purpose of the statement of cash flows.

(c) Trade and other receivables Trade and other receivables are stated at their invoice value less allowance for doubtful accounts. The allowance for doubtful accounts is assessed primarily on analysis of payment histories and future expectations of customer payments. Bad debts are written off when incurred.

(d) Inventories The Group values its inventories at cost and net realisable value, whichever is lower. Cost is calculated as follows: Finished goods - at standard cost which approximates actual production cost Merchandise - at average cost Goods in process - at standard cost which includes raw materials, labour and manufacturing overhead costs. Raw materials, spare parts, stores, supplies and others - at average cost Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. In the case of manufactured inventories and goods in process, cost includes an appropriate share of overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to complete and to make the sale.

(e) Non-current assets held for sale Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. The assets (or disposal group) are measured at the lower of their carrying value and fair value less cost to sell. Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets and investment properties. Impairment losses on initial classification as held for sale and subsequent gains and losses on re-measurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.


25

(f) Investments Investments in associates and jointly-controlled entities Investments in associates and jointly-controlled entities are accounted for using the equity method. Investments in other debt and other equity securities Debt securities and marketable equity securities held for trading are classified as current assets and are stated at fair value, with any resultant gain or loss recognised in profit or loss. Debt securities that the Group has the positive intent and ability to hold to maturity are classified as held-to-maturity investments, which are stated at amortised cost, less any accumulated impairment losses. The difference between the acquisition cost and redemption value of such debt securities is amortised using the effective interest rate method over the period to maturity. Debt securities and marketable equity securities, other than those securities held for trading or intended to be held to maturity, are classified as available-for-sale investments. Available-for-sale investments are, subsequent to initial recognition, stated at fair value, and changes therein, other than impairment losses and foreign currency differences on available-for-sale monetary items, are recognised directly in equity. Impairment losses and foreign exchange differences are recognised in profit or loss. When these investments are derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in profit or loss. Where these investments are interest-bearing, interest calculated using the effective interest method is recognised in profit or loss.

Equity securities which are not marketable are stated at cost less any accumulated impairment losses.

The fair value of financial instruments classified as held-for-trading and available-for-sale is determined as the quoted bid price at the end of the reporting period. Disposal of investments

On disposal of an investment, the difference between net disposal proceeds and the carrying amount together with the associated cumulative gain or loss that was reported in equity is recognised in profit or loss.

If the Group disposes of part of its holding of a particular investment, the deemed cost of the part sold is determined using the weighted average method applied to the carrying amount of the total holding of the investment.

(g) Investment properties Investment properties are properties which are held to earn rental income, for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment properties are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, and other costs directly attributable to bringing the investment property to a working condition for its intended use and capitalised borrowing costs.


26

Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each property. The estimated useful lives are as follows: Land improvements 5 - 20 years Buildings and structures 5 - 40 years Reclassification to property, plant and equipment When the use of an investment property changes such that it is reclassified as property, plant and equipment, its carrying amount at the date of reclassification becomes its cost for subsequent accounting.

(h) Finance lease

The Group entered into sale and lease back agreements for certain machinery and equipment, resulting in a finance lease. Excess of sales proceeds over the carrying amount is not immediately recognised as income. Instead it is deferred and amortised over the lease term. The Group recognised finance leases as assets and liabilities in the consolidated statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. Lease payments are apportioned between the finance charge and the reduction of the outstanding liabilities. The finance charge is allocated to the periods during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

(i) Property, plant and equipment

Owned assets

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different consumption patterns or useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income or other expenses in profit or loss. Leased assets Leases in terms of which the Group substantially assumes all the risk and rewards of ownership are classified as finance leases. Property, plant and equipment acquired by way of finance leases is capitalised at the lower of its fair value or the present value of the minimum lease payments at the inception of the lease, less accumulated depreciation and accumulated impairment losses. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to


27

achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to the profit or loss. Reclassification to investment property When the use of a property changes from owner-occupied to investment property, its carrying amount is recognised and reclassified as investment property. Subsequent costs The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. Depreciation Depreciation is calculated based on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value. Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. The estimated useful lives are as follows: Land improvements 3 - 33 yearsBuildings and structures - SCG Cement-Building Materials 3 - 49 years - SCG Chemicals 5 - 30 years - SCG Paper 20 - 30 years - Other 5 - 40 years Plant, machinery and equipment- SCG Cement-Building Materials 4 - 20 years - SCG Chemicals 3 - 40 years - SCG Paper 3 - 20 years Transportation equipment 3 - 20 years Furniture, fixtures and office equipment 2 - 20 years For two particular subsidiaries, Phoenix Pulp & Paper Public Company Limited and Thai Cane Paper Public Company Limited, depreciation of property, plant and equipment has been computed by the following methods over the periods as follows:

- Phoenix Pulp & Paper Public Company Limited Depreciation method Land improvements 5 - 30 years Straight-line Buildings and structures - Acquired prior to 1 January 2002 30 years Sinking fund - Acquired from 1 January 2002 20, 25, 30 years Straight-line Machinery and equipment 15 years Sinking fund Certain machinery and equipment 5 - 25 years Straight-line Transportation equipment 5 years Straight-line Furniture, fixtures and office equipment 3, 5 years Straight-line


28

- Thai Cane Paper Public Company Limited Depreciation method Land improvements 5 - 20 years Straight-line Buildings and structures 5, 20 years Straight-line Production machinery - Kanchanaburi Mill Estimated production capacity of 1.92 million tons - Prachinburi Mill Estimated production capacity of 5.25 million tons Machinery and equipment 5 - 15 years Straight-line Transportation equipment 5 years Straight-line Furniture and fixtures 5, 10 years Straight-line The effect of using the above different depreciation methods on the consolidated financial statements is insignificant. Depreciation for the finance lease assets is charged as expense for each accounting period. The depreciation method for leased assets is consistent with that for depreciable assets that are owned. No depreciation is provided on freehold land or assets under construction. Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

(j) Goodwill and intangible assets Goodwill Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. The measurement of goodwill at initial recognition is described in note 4 (a). Subsequent to initial recognition, goodwill is measured at cost less accumulated impairment losses. In respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity-accounted investee. Research and development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in profit or loss as incurred. Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use, and capitalised borrowing costs. Other development expenditure is recognised in profit or loss as incurred. Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated impairment losses.


29

Other intangible assets

Other intangible assets that are acquired by the Group, which have finite useful lives, are stated at cost less accumulated amortisation and accumulated impairment losses. Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred. Amortisation

Amortisation is based on the cost of the asset, or other amount substituted for cost, less its residual value.

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful lives are as follows:

Licence fees term of agreements Software licences 3 - 20 years Other 2 - 25 years

No amortization is provided on assets under development.

Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

(k) Impairment The carrying amounts of the Group’s assets are reviewed at each reporting period to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. For goodwill and intangible assets that have indefinite useful lives or are not yet available for use, the recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in profit or loss unless it reverses a previous revaluation credited to equity, in which case it is charged to equity. When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the value of the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in profit or loss even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in profit or loss is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss. Calculation of recoverable amount The recoverable amount of the Group’s investments in held-to-maturity securities and receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate. Receivables with a short duration are not discounted.


30

The recoverable amount of a non-financial asset is the greater of the asset’s value in use and fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Reversals of impairment

An impairment loss in respect of financial asset is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised in profit or loss.

An impairment loss in respect of goodwill is not reversed. Impairment losses recognised in prior periods in respect of other non-financial assets are assessed at each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of accumulated depreciation or accumulated amortisation, if no impairment loss had been recognised.

(l) Trade and other payables Trade and other payables are stated at cost.

(m) Employee benefits

Defined contribution plans

A defined contribution plan is a post-employment benefit under which an entity pays fixed contributions into a separate entity (Provident fund) and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees. Defined benefit plans

A defined benefit plan is a post-employment benefit other than a defined contribution plan. The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognised past service costs and fair value of plan assets are deducted. The discount rate is the yield at the end of the reporting period on government bonds that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the same currency in which the benefits are expected to be paid.

The calculation is performed by a qualified actuary using the projected unit credit method.

When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in profit or loss.

The Group recognises all actuarial gains and losses arising from defined benefit plans in other comprehensive income and all expenses related to defined benefit plans in profit or loss.


31

Other long-term employee benefits

The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The discount rate is the yield at the end of the reporting period on government bonds that have maturity dates approximating the terms of the Group’s obligations. The calculation is performed using the projected unit credit method. Any actuarial gains and losses are recognised in profit or loss in the period in which they arise. The calculation is performed by a qualified actuary using the projected unit credit method. Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

(n) Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance costs.

(o) Revenue Revenue excludes value added taxes and is arrived at after deduction of trade discounts and volume rebates allowed by the entity. Sale of goods and services rendered Revenue is recognised in profit or loss when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there is continuing management involvement with the goods or there are significant uncertainties regarding recovery of the consideration due, associated costs or the probable return of goods. Service income is recognised as services are provided on the basis of stage of completion. Interest and dividend income Interest income is recognised in profit or loss as it accrues. Dividend income is recognised in profit or loss on the date the Group’s right to receive payments is established, which in the case of quoted securities is usually the ex-dividend date. Service fee income Service fee income is recognised on an accrual basis in accordance with the terms of agreement.


32

(p) Expenses Operating leases Payments made under operating leases are recognised in profit or loss on a straight line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of lease. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed. Determining whether an arrangement contains a lease At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. A specific asset is the subject of a lease if fulfilment of the arrangement is dependent on the use of that specified asset. An arrangement conveys the right to use the asset if the arrangement conveys to the Group the right to control the use of the underlying asset. At inception or upon reassessment of the arrangement, the Group separates payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance charge on the liability is recognised using the Group’s incremental borrowing rate. Finance costs Finance costs comprise interest expense on borrowings, unwinding of the discount on provisions and contingent consideration, and dividends on preference shares classified as liabilities. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. Early retirement expense The Group offered certain qualifiable employees the option to take early retirement from the Group. Eligible employees who accept the offer are paid a lump sum amount which is calculated based on a formula using their final month’s pay, number of years of service or the number of remaining months before normal retirement as variables. The Group records expenses on early retirement upon mutual acceptance.

(q) Income tax Income tax expense for the year comprises current and deferred tax. Current and deferred tax are recognised in profit or loss except to the extent that they relate to items recognised directly in equity or in other comprehensive income. Current tax Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantially enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.


33

Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill; the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; and differences relating to investments in subsidiaries and jointly-controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, using tax rates enacted or substantively enacted at the end of the reporting period. The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. In determining the amount of current and deferred tax, the Group takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due. The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgements about future events. New information may become available that causes the Group to change its judgement regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact tax expense in the period that such a determination is made. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(r) Foreign currencies Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of the Group entities at the foreign exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are translated to the functional currency at the foreign exchange rates ruling at that date. Foreign exchange differences arising on translation are recognised in profit or loss. Non-monetary assets and liabilities measured at cost in foreign currencies are translated to the functional currency using the foreign exchange rates ruling at the dates of the transactions. Non-monetary assets and liabilities measured at fair value in foreign currencies are translated to the functional currency at the foreign exchange rates ruling at the dates that fair value was determined.


34

Foreign entities The assets and liabilities of foreign entities are translated to Thai Baht at the foreign exchange rates ruling at the end of the reporting period. Goodwill and fair value adjustments arising on the acquisition of foreign entities are stated at exchange rates ruling on transaction dates for acquisition occurred before the date 1 January 2013, and stated at exchange rates ruling at the end of reporting period for acquisition beginning on or after 1 January 2013. The revenues and expenses of foreign entities are translated to Thai Baht at rates approximating the foreign exchange rates ruling at the dates of the transactions and using the weighted average method. Foreign exchange differences arising on translation are recognised in other comprehensive income and presented in other components of equity until disposal of the investments. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and presented in other components of equity until disposal of the investment.

(s) Derivative financial instruments Financial assets and financial liabilities carried on the statement of financial position include cash and cash equivalents, trade and other receivables and payables, long-term receivables, loans, investments, borrowings and debentures. The Group operates internationally and is exposed to risks from changes in interest and foreign exchange rates. The Group uses derivative financial instruments to mitigate those risks. All gains and losses on hedge transactions are recognised in profit or loss in the same period as the interest and exchange differences on the items covered by the hedge.

(t) Business segment reporting Segment results that are reported to the Group’s Chief Operating Decision Maker include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.


35

5 Acquisitions of business and changes of status to subsidiaries Year 2014 Acquisitions In the second quarter of 2014, SCG Cement-Building Materials acquired 100% of the ordinary shares of Silathai Sanguan (2540) Co., Ltd. (Silathai Sanguan), which operates a crushing plant in Thailand, for a cash consideration of Baht 104 million. In the third quarter of 2014, SCG Cement-Building Materials acquired 55% of ordinary shares of Panel World Co., Ltd. (Panel World), which operates cement-bonded particleboard in Thailand, for a cash consideration of Baht 550 million. In the fourth quarter of 2014, the Group had acquired the businesses as follows; • SCG Chemicals acquired 51% of the ordinary shares of Norner Holding AS (Norner Group),

a leading Innovation and Technology firm in Norway, specializing in material and polymer industries, for a cash consideration of Baht 159 million.

• SCG Paper acquired 100% of the ordinary shares of D-In-Pack Company Limited (D-IN),

its plant is to convert sheet boards to boxes and caters in Thailand, for a cash consideration of Baht 30 million. In addition to this, SCG Paper acquired 90% of the ordinary shares of PT Indoris Printingdo (Indoris), a high quality packaging manufacturer in Indonesia, for a cash consideration of Baht 249 million.

The acquisitions qualify for treatment as a business combination in accordance with TFRS 3 (revised 2012) “Business Combinations”, which requires that the assets acquired, liabilities and contingent liabilities assumed be recorded at their fair values on acquisition date, together with goodwill, if any. The determination of the fair values of the above acquisitions has been completed, and the carrying amount of the assets acquired and liabilities assumed were adjusted accordingly. In 2014, the Group incurred acquisition cost of Baht 21 million which have been included in administrative expenses in the Group’s consolidated income statement. The assets and liabilities since acquisition date of these companies have been included in the Group’s consolidated financial statements for the year ended 31 December 2014. Since acquisition date, those subsidiaries contributed revenue from sales of Baht 163 million to the Group’s operating results. If the acquisition had occurred on 1 January 2014, management estimates that consolidated revenue from sales would have been Baht 488,268 million for the year ended 31 December 2014.


36

The subsidiaries’ net assets and liabilities at acquisition date comprised the following:

Silathai Panel NornerSanguan World D-IN Indoris Group Total

(in million Baht)

Cash and cash equivalents - 86 - 23 36 145

Trade receivables - 25 19 28 60 132

Inventories - 19 3 18 - 40

Other current assets - 20 - - 58 78

Property, plant and equipment 11 260 29 42 34 376

Other non-current assets - 3 - - 54 57

Interest-bearing loans and borrowings (41) - (13) (24) (30) (108)

Trade payables - (8) (14) (18) (5) (45)

Other non-current liabilities - (88) (1) (17) (95) (201)

Carrying amounts of net identifiable

assets and liabilities (30) 317 23 52 112 474

Add fair value adjustments 132 24 28 124 99 407

Less non-controlling interests - (153) - (18) (103) (274)

Recognised value of net assets acquired 102 188 51 158 108 607

Goodwill 2 362 - 91 51 506

Gain on a bargain purchase - - (21) - - (21)

Total consideration transferred 104 550 30 249 159 1,092

Cash acquired - (86) - (23) (36) (145)

Net cash outflows 104 464 30 226 123 947

Less accrued investment (21)

Net cash outflows in 2014 926

The Group has continuously determined its review of fair values of the business acquired within one year from the acquisition date, taking into accounts additional information, facts as well as circumstances that existed at the acquisition date. Consequently the Group will adjust the provisional fair values or recognise any additional assets or liabilities that existed at the acquisition date, and the adjustments on accounting transactions of such acquisition will be made.


37

Year 2013

Acquisitions In the second quarter of 2013, the Group had acquired the businesses as the following;

• SCG Cement-Building Materials acquired 85% of the ordinary shares of Prime Group Joint Stock Company (Prime Group), a leading ceramic tiles business in Vietnam which consists of 24 subsidiaries, for a cash consideration of Baht 5,215 million.

• SCG Paper acquired 75% of ordinary shares of both Dyna Packs Company Limited (Dyna) and Orient Containers Company Limited (Orient), Thai producers of corrugated containers, for a cash consideration of Baht 286 million.

In the third quarter of 2013, SCG Paper acquired 90% of the ordinary shares of PT Primacorr Mandiri (Primacorr), a producer of corrugated container in Indonesia, for a cash consideration of Baht 303 million.

The acquisition qualifies for treatment as a business combination in accordance with TFRS 3 (revised 2009) “Business Combinations”, which requires that the assets acquired, liabilities and contingent liabilities assumed be recorded at their fair values on acquisition date, together with goodwill, if any. The determination of the fair values of Prime Group, Dyna, Orient and Primacorr has been completed, and the carrying amount of the assets acquired and liabilities assumed were adjusted accordingly.

In 2013, the Group incurred acquisition cost of Baht 45 million which have been included in administrative expenses in the Group’s consolidated income statement.


38

The subsidiaries’ net assets and liabilities at acquisition date comprised the following:

Prime

Group Dyna Orient Primacorr Total

(in million Baht)

Cash and cash equivalents 34 2 24 - 60

Trade receivables 183 240 133 66 622

Inventories 1,323 20 32 61 1,436

Other current assets 420 1 1 3 425

Property, plant and equipment 2,644 127 377 189 3,337

Intangible assets 15 - - - 15

Other non-current assets 69 3 14 1 87

Interest-bearing loans and borrowings (1,666) (312) (389) (81) (2,448)

Trade payables (280) (30) (175) (37) (522)

Other current liabilities (409) (10) (6) (16) (441)

Other non-current liabilities (6) (1) (1) - (8)

Carrying amounts of net identifiable assets

and liabilities 2,327 40 10 186 2,563

Add fair value adjustments (360) 51 88 52 (169)

Less non-controlling interests (485) (23) (25) (24) (557)

Recognised value of net assets acquired 1,482 68 73 214 1,837

Goodwill 3,733 47 98 89 3,967

Total consideration transferred 5,215 115 171 303 5,804

Cash acquired (34) (2) (24) - (60)

Net cash outflows 5,181 113 147 303 5,744

Less accrued investment and other specified

purpose deposit in bank (451)

Net cash outflows in 2013 5,293

The Group has continuously determined its review of fair values of the business acquired within one year from the acquisition date, taking into accounts additional information, facts as well as circumstances that existed at the acquisition date. Consequently the Group will adjust the provisional fair values or recognise any additional assets or liabilities that existed at the acquisition date, and the adjustments on accounting transactions of such acquisition will be made.


39

Change of status to subsidiary

In the third quarter of 2013, the financial statements of the Group of Siam Sanitary Ware Company Limited (SSW) and The Siam Sanitary Fittings Company Limited (SSF), companies incorporated in Thailand (a manufacturer of sanitary ware and fittings products), have been included in the Group’s consolidated financial statements as a result of shareholders’ restructuring. The Group’s ownerships (direct and indirect) increased from 36% and 45% to 71% and 91%, respectively. As the result, the Group has significant management control over its financial and operating policies since 2 July 2013. The transaction value is Baht 2,597 million, resulting in the Group determined the fair value of the previously held equity interest in SSW and SSF prior to the change of status from associates to subsidiaries.

In the fourth quarter of 2013, the financial statements of Monier Roofing Co., Ltd. (MRC), company incorporated in Thailand (a manufacturer of clay roof tiles), have been included in the Group’s consolidated financial statements as a result of shareholders’ restructuring. The Group’s ownerships (direct and indirect) increased from 25% to 100%. As the result, the Group has significant management control over its financial and operating policies since 18 December 2013. The transaction value is Baht 37 million, resulting in the Group determined the fair value of the previously held equity interest in MRC prior to the change of status from associate to subsidiary.

SSW & SSF MRC Total

(in million Baht)

Fair value of previously held equity interest 2,576 2 2,578

Less carrying amount of investment at equity method (1,049) - (1,049)

Gain on revaluation of investment 1,527 2 1,529


40

The subsidiaries’ net assets and liabilities at the acquisition date comprised the following:

SSW & SSF MRC Total(in million Baht)

Cash and cash equivalents 284 6 290

Trade receivables 700 13 713

Inventories 898 62 960

Other current assets 131 3 134

Property, plant and equipment 1,565 29 1,594

Intangible assets 44 - 44

Other non-current assets 68 - 68

Interest-bearing loans and borrowings (45) - (45)

Trade payables (438) (14) (452)

Other current liabilities (397) (5) (402)

Other non-current liabilities (181) (2) (183)

Carrying amounts of net identifiable assets

and liabilities 2,629 92 2,721

Add fair value adjustments 1,258 104 1,362

Less non-controlling interests (858) - (858)

Less fair value of previously held equity interest (2,576) (2) (2,578)

Recognised value of net assets acquired 453 194 647

Goodwill 2,144 - 2,144

Gain on a bargain purchase - (157) (157)

Total consideration transferred 2,597 37 2,634

Cash acquired (284) (6) (290)

Net cash outflows in 2013 2,313 31 2,344

The assets and liabilities since acquisition date of these companies have been included in the Group’s consolidated financial statements for the year ended 31 December 2013. Since acquisition date, those subsidiaries contributed revenue from sales of Baht 9,196 million to the Group’s operating results. If the acquisition had occurred on 1 January 2013, management estimates that consolidated revenue from sales would have been Baht 438,548 million for the year ended 31 December 2013.


41

6 Related parties Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control, common control or joint control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa. Significant transactions with related parties for the years ended 31 December and the pricing policies are summarised as follows:

2014 2013 Pricing policies (in million Baht) Associates and jointly-controlled entities Purchases 28,288 16,872 Market price Service fee 1,915 1,889 Market price Revenue from sales 63,809 54,968 Market price Service income and others 925 923 Market price Management fee and others 2,048 2,025 Mainly based on percentage of revenue

from sales Dividend income 5,345 2,813 Upon declaration

Other Purchases 2,384 2,827 Market price Revenue from sales 480 956 Market price Service income and others 107 128 Market price Management fee and others 344 347 Mainly based on percentage of revenue

from sales Dividend income 3,816 4,525 Upon declaration Balances as at 31 December with related parties were as follows: Trade receivables 2014 2013 (in million Baht) Associates and jointly-controlled entities

Siam Polyethylene Co., Ltd. 1,557 943 Siam Styrene Monomer Co., Ltd. 598 840 Siam Synthetic Latex Co., Ltd. 433 374 Bangkok Synthetics Co., Ltd. 429 796 Thai MMA Co., Ltd. 370 125 Mitsui Advanced Composites (Zhongshan) Co., Ltd. 235 290 Grand Siam Composites Co., Ltd. 131 257 SCG Plastics (Shanghai) Co., Ltd. 77 68 Binh Minh Plastics Joint Stock Company 67 52 Siam Toppan Packaging Co., Ltd. 60 48 PT Styrindo Mono Indonesia 59 - The Siam Gypsum Industry (Saraburi) Co., Ltd. 51 51 Siam Global House Public Company Limited 51 37 Siam Kubota Corporation Co., Ltd. 37 19 MTP HPPO Manufacturing Co., Ltd. 21 3 Siam Mitsui PTA Co., Ltd. 18 17 Prepack Thailand Co.,Ltd. 18 - Siam Nippon Industry Paper Co., Ltd. 16 -


42

2014 2013 (in million Baht)

Nawacam Co., Ltd. 14 19 PT Chandra Asri Petrochemical Tbk. 11 1,964 SCG Plastics (China) Co., Limited 8 55 Siam Tohcello Co., Ltd. 7 24 Rengo Packaging Malaysia Sdn. Bhd. (Formerly: TCG Rengo Subang (M) Sdn. Bhd.) - 24 Tien Phong Plastics Joint Stock Company - 22 Other companies 68 62 4,336 6,090

Other Siam Yamato Steel Co., Ltd. 79 107 Other companies 14 11 93 118 Total 4,429 6,208 Other receivables 2014 2013 (in million Baht) Associates and jointly-controlled entities Siam Kubota Corporation Co., Ltd. 343 322 Thai MMA Co., Ltd. 57 54 Siam Mitsui PTA Co., Ltd. 45 52 Grand Siam Composites Co., Ltd. 38 40 Thai MFC Co., Ltd. 21 16 Riken (Thailand) Co., Ltd. 19 6 Sekisui-SCG Industry Co., Ltd. 17 9 Thai PET Resin Co., Ltd. 14 20 Long Son Petrochemicals Co., Ltd. - 62 Other companies 103 85 657 666

Other Michelin Siam Group Co., Ltd. 205 205

Siam Yamato Steel Co., Ltd. 14 11 Other companies 30 35 249 251 Total 906 917

Short-term loans to related parties 2014 2013 (in million Baht) Associates PT M Class Industry 68 100 GTC Technology International, LP 41 41 Other companies 6 5 Total 115 146


43

Long-term loans to related parties 2014 2013 (in million Baht) Associate Mariwasa Holdings, Inc. 149 143

Movements during the years on loans to related parties were as follows:

2014 2013 (in million Baht) Short-term At 1 January 146 137 Increase - 47 Decrease (31) (38) At 31 December 115 146

Long-term At 1 January 143 137 Increase 6 7 Decrease - (1) At 31 December 149 143 Trade payables 2014 2013 (in million Baht) Associates Mehr Petrochemical Company (P.J.S.C.) 2,757 286 Siam Kubota Corporation Co., Ltd. 706 404 PT Chandra Asri Petrochemical Tbk. 573 224 Siam Polyethylene Co., Ltd. 469 398 Bangkok Synthetics Co., Ltd. 204 393 Sekisui-SCG Industry Co., Ltd. 145 36 The Siam Gypsum Industry (Saraburi) Co., Ltd. 142 65 Thai MMA Co., Ltd. 127 15 Thai PET Resin Co., Ltd. 83 95 Siam Synthetic Latex Co., Ltd. 69 81 Jumbo Barges and Tugs Co., Ltd. 57 46 IT One Co., Ltd. 53 57 The Siam Gypsum Industry (Songkhla) Co., Ltd. 21 26 Siam Styrene Monomer Co., Ltd. 18 28 Other companies 39 22 5,463 2,176 Other Siam Yamato Steel Co., Ltd. 101 161 Other companies - 3 101 164 Total 5,564 2,340


44

Other payables

2014 2013 (in million Baht) Associates IT One Co., Ltd. 38 91 Siam Polyethylene Co., Ltd. - 71 Other companies 10 17 Total 48 179

Short-term loans from related parties

2014 2013 (in million Baht) Other PT Trans-Pacific Polyethylene Indonesia 78 77 Other companies 12 11 Total 90 88 Movements during the years on short-term loans from related parties were as follows:

2014 2013 (in million Baht) At 1 January 88 105 Increase 2 22 Decrease - (39) At 31 December 90 88 Key management compensation

2014 2013 (in million Baht) For the years ended 31 December Short-term employee benefits 306 332 Post-employment benefits 19 20

Total 325 352

Management compensation comprises the remuneration paid to the directors of The Siam Cement Public Company Limited under the articles of the Company and the remuneration paid to the management as staffs expenses in terms of salary, bonus, others and contribution to defined contribution plans.


45

7 Trade and other receivables

Note 2014 2013 (in million Baht) Trade receivables Related parties 6 4,429 6,208

Other companies 36,810 34,488 Less allowance for doubtful accounts 931 867 Net 35,879 33,621

40,308 39,829

Other receivables Related parties 6 906 917 Other companies 10,628 8,707 11,534 9,624 Total 51,842 49,453 Doubtful debts expenses for the year 110 75 2014 2013 (in million Baht) Trade receivables Related parties Within credit terms 4,382 6,135 Overdue: Less than 3 months 42 71 3 - 6 months 2 1 Over 6 - 12 months 1 - Over 12 months 2 1 Total 4,429 6,208

Other companies Within credit terms 31,439 30,021 Overdue: Less than 3 months 3,893 3,061 3 - 6 months 391 475 Over 6 - 12 months 225 155 Over 12 months 862 776 36,810 34,488 Less allowance for doubtful accounts 931 867 Net 35,879 33,621

Total 40,308 39,829

The normal credit term granted by the Group is 15 - 90 days.

As at 31 December 2014, the outstanding overdue amounts of above accounts receivable have credit bank guarantees amounting to Baht 1,011 million (2013: Baht 1,155 million).


46

8 Inventories 2014 2013 (in million Baht) Finished goods 22,249 21,601 Goods in process 2,557 2,898 Raw materials 12,037 13,023 Spare parts 6,731 6,380 Stores, supplies and others 4,365 4,779 Raw materials in transit 6,018 7,539 Total 53,957 56,220 Less allowance for decline in value 1,210 663 Net 52,747 55,557

Cost of inventories recognised as an expense in cost of sales: - Cost of sales 409,431 363,096 - Write-down to net realisable value (1,020) (738)- Reversal of write-down 493 583 - Service cost and others (19,227) (16,579)Net total 389,677 346,362

Changes in inventories of finished goods and goods in process (307) (2,166)Raw materials and supplies used 341,222 303,803

9 Cash and cash equivalents and other investments 2014 2013 (in million Baht) Cash and cash equivalents Cash on hand and at banks 14,716 12,658 Highly liquid short-term investments 4,280 4,770 Cash (Private funds) 35 6 Total 19,031 17,434

Temporary investments Fixed deposits with financial institutions 53 - Available-for-sale debt securities (Private funds) 7,970 6,984 Total 8,023 6,984 Available-for-sale investments Available-for-sale debt securities (Private funds) 4,505 5,178 Marketable equity securities 3,880 5,959 Total 8,385 11,137 As at 31 December 2014, the value of private funds invested by 3 independent assets management companies was totalling Baht 12,510 million (2013: Baht 12,168 million). Those private funds had invested in debt securities which had high liquidity and rating as investment grade with return rates from 1.99% to 3.90% per annum (2013: from 2.27% to 4.31% per annum).


47

The quoted market prices of available-for-sale investments on the Stock Exchange as at 31 December 2014 are as follows:

Net changes in

Quoted fair value of

market prices available-for-sale

Cost (latest bid price) securities

(in million Baht)

Marketable securities 15,098 16,355 1,257 Movements during the years of net changes in fair value of available-for-sale investments (before tax) were as follows:

2014 2013

(in million Baht)

Net change in fair value (2,051) 805 Transfer of gain on net change in fair value to profit or loss (27) (636) Net (2,078) 169

10 Investments in associates and jointly-controlled entities

Movements for the years ended 31 December in investments in associates and jointly-controlled entities accounted for using the equity method were as follows: 2014 2013 (in million Baht) At 1 January 79,188 65,575 Share of net profit of investments - equity method 6,108 6,546 Increase in investments 2,446 10,870 Dividend income (5,345) (2,813) Disposals - (194) Change of the status to associates 355 24 Change of the status to subsidiaries - (1,049) Other (404) 229 At 31 December 82,348 79,188


48

Investments in associates and jointly-controlled entities as at 31 December and dividends from these investments in the years ended at the same date are as follows:

Total direct /

indirect holding Paid-up capital Cost method Equity method Dividend income

2014 2013 2014 2013 2014 2013 2014 2013 2014 2013

(%) (in million Baht)

Associates

SCG Cement-Building Materials

Siam Global House Public Company Limited 30 30 3,049 2,613 9,414 9,414 9,974 9,737 15 12 Sekisui-SCG Industry Co., Ltd. 49 49 2,325 2,325 1,139 1,139 688 775 - - The Siam Gypsum Industry Co., Ltd. 29 29 150 150 46 46 628 592 241 298 Maker - Manifatture Ceramiche S.r.l. 33 - 803 - 502 - 442 - - - Jumbo Barges and Tugs Co., Ltd. 45 45 457 457 262 262 322 307 - 3 Anhui Conch-SCG Refractory Co., Ltd. 30 30 497 497 148 148 210 174 8 - Noritake SCG Plaster Co., Ltd. 40 40 405 405 134 134 183 179 - - PT M Class Industry 28 28 222 222 106 106 62 38 - - Green Siam Resources Corporation 40 40 95 95 38 38 53 49 - - Thai Prosperity Terminal Co., Ltd. 50 50 63 63 31 31 50 55 - 5 Lao Premium Roof Tiles Co., Ltd. (Formerly: CPAC Monier (Laos) Co., Ltd.) 50 50 21 21 11 11 26 27 - - CMPI Holding, Inc. 40 40 55 55 18 18 20 16 2 - Mariwasa Holdings, Inc. 40 40 235 235 94 94 17 20 - - Other companies 136 136 51 51 49 57 10 46

8,513 7,274 11,994 11,492 12,724 12,026 276 364

SCG Chemicals

PT Chandra Asri Petrochemical Tbk. 31 30 14,679 14,679 14,237 14,134 14,015 13,609 23 - Bangkok Synthetics Co., Ltd. 49 49 1,173 1,173 10,800 10,812 12,233 15,938 3,437 305 Siam Styrene Monomer Co., Ltd. 50 50 4,755 4,755 2,375 2,375 6,134 5,093 - - Thai MMA Co., Ltd. 47 47 5,590 5,590 2,571 2,571 3,742 3,424 617 823 Siam Polyethylene Co., Ltd. 50 50 4,455 4,455 2,183 2,183 2,440 2,491 - - Siam Synthetic Latex Co., Ltd. 50 50 5,789 5,789 2,788 2,788 1,384 1,401 - - Siam Polystyrene Co., Ltd. 50 50 995 995 493 493 935 829 - - Tien Phong Plastics Joint Stock Company 22 22 845 652 738 738 922 849 23 54 Binh Minh Plastics Joint Stock Company 19 19 682 682 642 642 832 780 42 35 Grand Siam Composites Co., Ltd. 46 46 64 64 167 167 800 810 277 600 Mehr Petrochemical Company (P.J.S.C.) 39 39 1,335 1,335 801 801 744 177 - - Riken (Thailand) Co., Ltd. 32 32 120 120 42 42 464 523 112 114 Mitsui Advanced Composites (Zhongshan) Co., Ltd. 20 20 596 596 119 119 339 337 75 58 GTC Technology International, LP 25 25 191 191 107 107 259 245 - - PT Siam Maspion Terminal 50 50 327 327 163 163 240 162 33 - Siam Tohcello Co., Ltd. 45 45 592 592 266 266 205 251 - - Thai PET Resin Co., Ltd. 20 20 900 900 180 180 158 158 - - Thai MFC Co., Ltd. 45 45 200 200 87 87 153 194 81 18 SD Group Service Co., Ltd. 50 50 78 78 38 38 111 110 - - GTC Technology US, LLC 25 25 102 102 160 160 56 114 - - Other companies 20 20 18 18 83 79 21 14

43,488 43,295 38,975 38,884 46,249 47,574 4,741 2,021

SCG Paper

Siam Nippon Industrial Paper Co., Ltd. 34 44 1,100 1,100 495 495 417 490 - - Siam Toppan Packaging Co., Ltd. 48 48 500 500 245 245 384 372 5 3 Prepack Thailand Co., Ltd. 15 - 367 - 288 - 291 - - - Rengo Packaging Malaysia Sdn. Bhd. (Formerly: TCG Rengo Subang (M) Sdn. Bhd.) 17 17 804 804 201 201 160 184 - - Saha Green Forest Co., Ltd. 19 25 190 190 48 48 50 47 - - Other companies 263 263 105 105 - - - -

3,224 2,857 1,382 1,094 1,302 1,093 5 3


49

Total direct /

indirect holding Paid-up capital Cost method Equity method Dividend income

2014 2013 2014 2013 2014 2013 2014 2013 2014 2013


Other

Siam Kubota Corporation Co., Ltd. 40 40 2,739 2,739 1,120 1,120 12,120 9,738 109 109 Thai Engineering Products Co., Ltd. 30 30 85 85 76 76 1,430 1,407 47 42 Musashi Auto Parts Co., Ltd. 21 21 200 200 42 42 853 736 - - Siam AT Industry Co., Ltd. 30 30 240 240 72 72 723 705 49 42 Aisin Takaoka Foundry Bangpakong Co., Ltd. 30 30 475 475 142 142 543 497 38 45 The Nawaloha Industry Co., Ltd. 30 30 300 300 90 90 442 427 9 28 The Siam Nawaloha Foundry Co., Ltd. 25 25 308 308 74 74 358 343 11 9 Lysando AG 20 - 39 - 355 - 344 - - - Muang Thong United Co., Ltd. 30 30 120 120 120 120 97 116 - - IT One Co., Ltd. 20 20 80 80 16 16 88 92 60 68 Siam Lemmerz Co., Ltd. 30 30 126 110 299 294 36 88 - 82

4,712 4,657 2,406 2,046 17,034 14,149 323 425

Jointly-controlled entitiesSCG Cement-Building Materials

SCG Nichirei Logistics Co., Ltd. 51 51 570 342 291 174 282 174 - -

SCG Chemicals

Siam Mitsui PTA Co., Ltd. 50 50 4,800 4,800 2,372 2,372 2,735 3,528 - - Long Son Petrochemicals Co., Ltd. 44 44 4,408 1,646 2,189 758 1,997 619 - - SMH Co., Ltd. 50 50 60 60 31 31 25 25 - -

Total 69,775 64,931 59,640 56,851 82,348 79,188 5,345 2,813

The following summarised financial information related to interests in jointly-controlled entities for the years ended 31 December is as follows:

Non- Non- Share- Profit

Total direct / Current current Total Current current holders' Total Total (loss) for

indirect holding assets assets assets liabilities liabilities equity revenues expenses the year


2014

SCG Nichirei Logistics Co., Ltd. 51 59 337 396 14 100 282 12 (22) (10)

Siam Mitsui PTA Co., Ltd. 50 1,498 4,053 5,551 2,638 159 2,754 14,237 (15,031) (794)

Long Son Petrochemicals Co., Ltd. 44 1,509 453 1,962 190 - 1,772 1 (46) (45)

SMH Co., Ltd. 50 6 28 34 - - 34 1 - 1

2013

SCG Nichirei Logistics Co., Ltd. 51 97 86 183 3 6 174 3 (3) -

Siam Mitsui PTA Co., Ltd. 50 2,165 4,324 6,489 1,903 1,039 3,547 15,243 (15,809) (566)

Long Son Petrochemicals Co., Ltd. 44 424 267 691 71 - 620 - (4) (4)

SMH Co., Ltd. 50 6 28 34 - - 34 - - -

Common stock dividend payments In the second quarter of 2014, the Annual General Meeting of the Shareholders of Tien Phong Plastics Joint Stock Company approved dividend payment of cash dividend and common stock dividend with the dates of dividend payment on 20 June 2014 and within July 2014, respectively. The Group is entitled to receive common stock dividend of approximately 3.10 million shares at the par value VND 10,000 per share, totalling approximately Baht 46 million.


50

During 2014, the Annual General Meeting of the Shareholders of Siam Global House Public Company Limited approved dividend payment of cash dividend and common stock dividend with the date of dividend payment on 29 April 2014. The Group is entitled to receive common stock dividend of approximately 131 million shares at the par value Baht 1 per share, totalling approximately Baht 131 million.

11 Other long-term investments

Total direct /

indirect holding Investment Dividend income

2014 2013 2014 2013 2014 2013


At CostSCG Cement-Building Materials

Asia Cement Public Company Limited 10 10 942 942 47 39

Holcim Cement (Bangladesh) Limited 10 10 375 375 18 10

Finfloor S.p.A. 10 10 299 299 9 -

Other companies 59 59 - -

1,675 1,675 74 49

SCG Chemicals

PT Trans-Pacific Petrochemical Indotama 5 20 2,002 2,002 - -

PT Trans-Pacific Polyethylene Indonesia * 39 39 184 184 - -

PT Trans-Pacific Polyethylindo * 39 39 131 131 - -

PT Trans-Pacific Styrene Indonesia 10 10 31 31 - -

Econic Technologies Ltd. 3 - 23 - - -

PT Trans-Pacific Polypropylene Indonesia 10 10 22 22 - -

Other companies 33 33 7 7

2,426 2,403 7 7 * No existence of significant influence

SCG Paper 31 31 - -

Other

Toyota Motor Thailand Co., Ltd. 10 10 881 881 3,459 4,226

Siam Yamato Steel Co., Ltd. 10 10 484 484 30 -

Siam Toyota Manufacturing Co., Ltd. 4 4 178 138 41 38

Michelin Siam Group Co., Ltd.

- Cumulative preferred shares 10 10 - 267 205 205

Lysando AG - 10 - 180 - -

Other companies 14 13 - -

1,557 1,963 3,735 4,469

Total 5,689 6,072 3,816 4,525 Less accumulated impairment losses 2,611 2,594 - -

Net 3,078 3,478 3,816 4,525

The aggregate values of the above investments, based on the latest available audited/reviewed financial statements as at 31 December 2014 are as follows: Interests in Accumulated Cost carrying amount impairment losses (in million Baht)

Non-marketable securities 5,689 8,948 (2,611)


51

12 Investment properties

Land and land Buildings and

improvements structures Total

(in million Baht)

Cost

At 1 January 2013 1,330 560 1,890

Additions 61 - 61

Adjustment (24) (64) (88)

Transfers from property, plant and equipment 63 - 63

At 31 December 2013 1,430 496 1,926

Additions 203 32 235

Disposals (95) - (95)

Adjustment 189 - 189

Transfers to property, plant and equipment (16) - (16)

At 31 December 2014 1,711 528 2,239

Accumulated depreciation

and accumulated impairment losses

At 1 January 2013 109 307 416

Depreciation charge for the year - 23 23

Impairment losses 7 - 7

Adjustment (1) (54) (55)

At 31 December 2013 115 276 391

Depreciation charge for the year - 23 23

Adjustment 189 - 189

At 31 December 2014 304 299 603

Carrying amount

At 31 December 2013 1,315 220 1,535

At 31 December 2014 1,407 229 1,636

Investment properties were revalued as at 31 December 2014 at open market values on an existing use basis. The appraised value was Baht 4,118 million (2013: Baht 3,761 million).


52

13 Property, plant and equipment

Plant, Furniture,

Land Buildings machinery Transportation fixtures

and land and and and and office Construction

improvements structures equipment equipment equipment in progress Total

(in million Baht)

Cost

At 1 January 2013

- as reported 20,463 45,810 302,387 5,007 5,397 20,040 399,104

Impact of changes in

accounting policy - - 674 - - - 674

At 1 January 2013

- restated 20,463 45,810 303,061 5,007 5,397 20,040 399,778

Acquisitions through

business combinations 1,150 3,196 7,047 194 210 746 12,543

Additions 1,267 1,366 4,862 446 294 18,820 27,055

Disposals/written off (54) (210) (2,452) (92) (237) (9) (3,054)

Transfers to investment

properties (63) - - - - - (63)

Transfers to assets

held for sales - - (544) - - - (544)

Transfers in (out) 1,004 3,443 17,323 330 320 (21,768) 652

Foreign currency

translation differences (314) 91 (83) (17) (16) (63) (402)

At 31 December 2013 23,453 53,696 329,214 5,868 5,968 17,766 435,965


business combinations 213 91 630 20 9 167 1,130

Additions 1,739 1,364 7,615 359 284 27,658 39,019

Disposals/written off (202) (202) (3,171) (139) (134) (22) (3,870)

Transfers from investment

properties 16 - - - - - 16

Transfers in (out) 652 2,574 10,499 326 184 (14,779) (544)

Foreign currency

translation differences (12) (31) (211) 5 (4) 33 (220)

At 31 December 2014 25,859 57,492 344,576 6,439 6,307 30,823 471,496


53

Plant, Furniture,

Land Buildings machinery Transportation fixtures

and land and and and and office Construction

improvements structures equipment equipment equipment in progress Total

(in million Baht)

Accumulated depreciation

and accumulated

impairment losses

At 1 January 2013

- as reported 6,434 26,282 192,554 4,061 4,481 - 233,812

Impact of changes in

accounting policy - - 371 - - - 371

At 1 January 2013

- restated 6,434 26,282 192,925 4,061 4,481 - 234,183


business combinations 105 907 4,856 99 160 - 6,127

Depreciation charge

for the year 429 1,960 12,022 314 356 - 15,081

Impairment losses

(reversal) - 28 (18) - - - 10

Disposals/written off (42) (170) (2,372) (75) (211) - (2,870)

Transfers to assets

held for sales - - (401) - - - (401)

Transfers in (out) 1 242 (133) (14) (39) - 57

Foreign currency

translation differences 13 11 (61) (12) (15) - (64)

At 31 December 2013 6,940 29,260 206,818 4,373 4,732 - 252,123


business combinations - 34 311 8 7 - 360

Depreciation charge

for the year 626 2,220 13,649 438 425 - 17,358

Impairment losses

(reversal) - (28) 89 - 8 - 69

Disposals/written off (68) (140) (2,975) (118) (127) - (3,428)

Transfers in (out) (29) (52) 170 1 (51) - 39

Foreign currency

translation differences 1 (3) (102) (2) (4) - (110)

At 31 December 2014 7,470 31,291 217,960 4,700 4,990 - 266,411

Carrying amount

At 31 December 2013 16,513 24,436 122,396 1,495 1,236 17,766 183,842

At 31 December 2014 18,389 26,201 126,616 1,739 1,317 30,823 205,085

The gross carrying amount of fully depreciated property, plant and equipment that is still in use amounted to Baht 135,419 million as at 31 December 2014 (2013: Baht 134,771 million).

Capitalised borrowing costs relating to the acquisition of the property, plant and equipment incurred in the year ended 31 December 2014, amounting to Baht 309 million (2013: Baht 209 million), rates of interest capitalised at 1.10% - 5.00% per annum (2013: 4.40% - 5.00% per annum), were capitalised as part of the cost of construction in progress.

The cost of machinery and equipment held under finance leases was Baht 188 million as at 31 December 2014 (2013: Baht 4,449 million) and has carrying amount of Baht 112 million as at 31 December 2014 (2013: Baht 1,353 million).


54

14 Goodwill and intangible assets

Software

licences & Development

Goodwill licence fees cost Other Total

(in million Baht)

Cost

At 1 January 2013 3,801 5,246 462 2,540 12,049


business combinations 6,111 61 15 8 6,195

Additions - 310 1,465 276 2,051

Disposals/written off - (108) (22) - (130)

Foreign currency

translation differences 388 - - - 388

Transfers in (out) - 219 (304) 81 (4)

At 31 December 2013 10,300 5,728 1,616 2,905 20,549


business combinations 506 15 - 103 624

Additions - 267 861 106 1,234

Disposals/written off - (27) - - (27)

Foreign currency

translation differences (7) (1) - - (8)

Transfers in (out) - 939 (928) 71 82

At 31 December 2014 10,799 6,921 1,549 3,185 22,454

Accumulated amortisation

At 1 January 2013 - 3,063 (3) 317 3,377


business combinations - 24 - 3 27

Amortisation charge for the year - 466 - 138 604


Transfers in - 8 - 10 18

At 31 December 2013 - 3,505 (3) 468 3,970

Amortisation charge for the year - 530 - 123 653


Transfers in (out) - (1) - 12 11

At 31 December 2014 - 4,011 (3) 603 4,611

Carrying amount

At 31 December 2013 10,300 2,223 1,619 2,437 16,579

At 31 December 2014 10,799 2,910 1,552 2,582 17,843 For the purpose of impairment testing, the recoverable amount of goodwill was based on its value in use and was determined by discounting the future cash flows for the period of five years using weighted average cost of capital of the Group.


55

15 Deferred tax assets (deferred tax liabilities)

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, and are included in the consolidated statement of financial position as follows:

2014 2013 (in million Baht) Deferred tax assets 4,261 4,604 Deferred tax liabilities (2,366) (2,785) Net 1,895 1,819

Movements in total deferred tax assets and liabilities during the years were as follows:

Credited (charged) to

Impact of other Increase

At changes in profit or comprehensive through At

1 January accounting loss income business Translation 31 December

2013 policy (note 30) combinations differences 2013

(in million Baht)Deferred tax assets

Investments 126 - 56 - - - 182

Property, plant

and equipment 245 - (8) - 78 8 323

Employee benefit liabilities 1,104 - 60 5 38 (3) 1,204

Loss carry forward 3,244 - 126 - 23 - 3,393

Other 773 - (37) - 14 (5) 745

Total 5,492 - 197 5 153 - 5,847

Deferred tax liabilities

Available-for-sale

investments (825) - 30 (1) - 3 (793)

Property, plant

and equipment (2,672) (12) (52) - (369) (5) (3,110)

Other (166) - 29 - - 12 (125)

Total (3,663) (12) 7 (1) (369) 10 (4,028)

Net 1,829 (12) 204 4 (216) 10 1,819


56

Credited (charged) to

other Increase

At profit or comprehensive through At

1 January loss income business Translation 31 December

2014 (note 30) combinations differences 2014

(in million Baht)Deferred tax assets

Investments 182 (50) - - - 132

Property, plant

and equipment 323 2 - - - 325

Employee benefit liabilities 1,204 73 (8) - (4) 1,265

Loss carry forward 3,393 (416) - - - 2,977

Other 745 22 - 13 (3) 777

Total 5,847 (369) (8) 13 (7) 5,476

Deferred tax liabilities

Available-for-sale

investments (793) - 412 - - (381)

Property, plant

and equipment (3,110) 260 - (81) 11 (2,920)

Other (125) (139) - (7) (9) (280)

Total (4,028) 121 412 (88) 2 (3,581)

Net 1,819 (248) 404 (75) (5) 1,895

The deductible temporary differences and unused tax losses that have not been recognised as deferred tax assets (liabilities) are as the following items: 2014 2013 (in million Baht) Deductible temporary differences

- Inventories 574 117 - Property, plant and equipment 362 346 - Employee benefit liabilities 177 198 - Other 169 182

Unused tax losses 29,570 27,602 Total 30,852 28,445

The deductible temporary differences do not expire under current tax legislation and the tax losses which would be expired within 2022. The Group has not recognised these items in deferred tax assets. As at 31 December 2014 and 2013, no deferred tax liability has been recognised in respect of temporary differences associated with investments in subsidiaries and jointly-controlled entities, where the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such difference will not reverse in the foreseeable future.


57

16 Other non-current assets 2014 2013 (in million Baht) Land prepayments 1,443 1,111 Factory prepayments 675 643 Land and assets not used in operations 630 883 Other prepayment 404 380 Recoverable tax 200 320 Other 1,888 1,878 Total 5,240 5,215 Less accumulated impairment losses 201 163 Net 5,039 5,052

17 Bank overdrafts and short-term loans from financial institutions

2014 2013 (in million Baht) Promissory notes 10,573 11,241 Loans 1,787 1,561 Bank overdrafts and others 149 115 Total 12,509 12,917 The Group has overdraft lines with several banks amounting to approximately Baht 5,700 million in 2014 (2013: Baht 6,500 million).

18 Long-term debts

2014 2013 (in million Baht) Current

- Secured Current portion of long-term debts 2,047 2,031 - Unsecured Current portion of long-term debts 6,068 3,042 Current portion of finance lease liabilities 24 843 8,139 5,916

Non-current

- Secured Long-term debts 10,124 11,952 - Unsecured Long-term debts 14,023 14,961

Finance lease liabilities 72 460 24,219 27,373 Total 32,358 33,289


58

The currency denomination of interest-bearing debts is as follows:

2014 2013 (in million Baht) Thai Baht 23,157 22,191 US Dollars 8,051 9,495 Euro 652 977 Peso 377 496 Other 121 130 Total 32,358 33,289 During the year ended 31 December 2014, the Group has drawn down under the loan agreements made equivalent to Baht 8,590 million (2013: Baht 4,600 million). The average interest rates are approximately 0.62% - 6.26% per annum (2013: 0.62% - 5.25% per annum), which has undrawn down totalling equivalent to Baht 8,172 million. Repayment schedules are monthly to semi-annually, with payment period of 3 - 14 years and some loans have repayment schedule only at maturity of the loan agreements. Many of the above long-term loans are guaranteed by the Company. The average interest rate of long-term debts in foreign currency is approximately 0.92% per annum in 2014 (2013: 2.56% per annum). The Group has mainly entered into various forward foreign exchange contracts and interest rate swap agreements to hedge the foreign exchange rate and interest rate risks as discussed in note 34. The interest-bearing debts, excluding finance lease liabilities, can be classified by periods to maturity as follows: 2014 2013 (in million Baht) Within 1 year 8,115 5,073 After 1 year but within 5 years 21,993 23,843 After 5 years 2,154 3,070 Total 32,262 31,986 Finance lease liabilities Subsidiaries entered into leased machinery and equipment agreements. Lease terms are for a period of 3 - 9 years. Finance lease liabilities as at 31 December are as follows:

Principal Interest Payments (in million Baht)

Year 2014 Within 1 year 24 4 28 After 1 year but within 5 years 61 7 68 After 5 years 11 1 12 Total 96 12 108

Year 2013 Within 1 year 843 12 855 After 1 year but within 5 years 460 2 462 Total 1,303 14 1,317


59

19 Debentures

As at 31 December 2014, the Company had issued unsubordinated and unsecured debentures totalling Baht 151,500 million (2013: Baht 141,500 million) as follows:

Fair Value *

Debentures No. 2014 2013 Interest Rate Term Maturity Date 2014 2013

(% p.a.)

Debentures - The Siam Cement Public Company Limited

1/2010 - 10,000 3.85 4 years 1 April 2014 - 1,004

2/2010 - 5,000 3.85 4 years 1 October 2014 - 1,015

1/2011 15,000 15,000 4.00 4 years 1 April 2015 1,003 1,018

2/2011 10,000 10,000 4.50 4 years 1 November 2015 1,031 1,022

1/2012 25,000 25,000 4.15 4 years 1 April 2016 1,029 1,021

2/2012 25,000 25,000 4.15 4 years 1 November 2016 1,031 1,020

3/2012 6,500 6,500 4.40 7 years 12 October 2019 1,047 1,006

1/2013 25,000 25,000 4.00 4 years 1 April 2017 1,037 1,003

2/2013 20,000 20,000 4.25 4 years 1 October 2017 1,041 1,013

1/2014 15,000 - 4.00 4 years 1 April 2018 1,042 -

2/2014 10,000 - 3.90 4 years 1 October 2018 1,023 -

Total 151,500 141,500

Less Debentures

held by subsidiaries 408 363

Net 151,092 141,137

Less Current portion 24,885 14,963

Net 126,207 126,174

(in million Baht)

* Latest price (Baht per unit: 1 unit = Baht 1,000) as at 31 December 2014 and 2013.


60

20 Employee benefit liabilities

The Group operates post-employment benefits and pension plans based on the requirement of the Thai Labour Protection Act B.E. 2541 to provide retirement benefits and other long-term benefits to employees based on pensionable remuneration and length of service. Employee benefit liabilities in consolidated statements of financial position as at 31 December

2014 2013 (in million Baht) Post-employment benefits

Legal severance payments plan 5,456 5,202 Pension 60 42

Other long-term employee benefits 701 669 Other employee benefits 192 272

Total 6,409 6,185 Less plan assets of foreign subsidiaries 78 62

Net 6,331 6,123

Movements in the present value of the defined benefit obligations

2014 2013 (in million Baht) For the years ended 31 December Defined benefit obligations at 1 January 5,913 5,360 Benefits paid (250) (233) Current service costs and interest 655 655 Acquisitions through business combinations 22 184 Actuarial losses (gains) Recognised in profit or loss (15) (5) Recognised in other comprehensive income (100) 28 Foreign currency translation differences (8) (76)

Defined benefit obligations at 31 December 6,217 5,913

Movements in the fair value of plan assets of foreign subsidiaries

2014 2013 (in million Baht) For the years ended 31 December

Plan assets at 1 January 62 52 Contributions paid into the plan 21 19 Benefits paid (7) (10) Expected return on plan assets of foreign subsidiaries 2 1

Plan assets at 31 December 78 62


61

Consolidated statement of comprehensive income Recognised in profit or loss 2014 2013 (in million Baht) For the years ended 31 December Current service costs 429 448 Interest on obligation 226 207 Expected return on plan assets of foreign subsidiaries (2) (1) Actuarial gains (15) (5) Total 638 649

Expenses recognised in profit or loss are included in the following; 2014 2013 (in million Baht) For the years ended 31 December Cost of sales 224 184 Administrative expenses 414 465 Total 638 649

Recognised in other comprehensive income 2014 2013 (in million Baht) For the years ended 31 December Actuarial losses (gains) (100) 28 Principal actuarial assumptions at the end of the reporting period

Defined benefit obligations 2014 2013 (%) For the years ended 31 December

Discount rate - Thailand 3.20 - 4.58 3.20 - 4.58 - Vietnam 10.50 10.50 - Indonesia 7.50 - 9.00 7.50 - 9.00 - Other 5.10 - 5.75 5.10 - 5.75 Salary increase rate 3.00 - 8.70 3.00 - 8.70 Employee turnover rate 0.50 - 20.00 * 0.50 - 20.00 * Mortality rate 25.00, 30.00, 50.00

of TMO2008 **

25.00, 30.00, 50.00 of TMO2008

**

* Upon the length of service ** Reference from TMO2008: Thai Mortality Ordinary Table 2008


62

Plan assets of foreign subsidiaries

2014 2013 (%) For the years ended 31 December Discount rate 5.10, 5.75 5.10, 5.75 Expected return on plan assets 4.00, 7.00 4.00, 7.00

21 Other non-current liabilities

2014 2013 (in million Baht) Deferred revenue 415 381 Provision for share certificates compensation case 349 307 Accrued dividend and interest of debentures 163 169 Other 938 823 Total 1,865 1,680

22 Share capital

2014 2013 Par Number Number Value of shares Value of shares Value (in Baht) (in million shares / million Baht)

Authorised At 1 January - ordinary shares 1 1,600 1,600 1,600 1,600 At 31 December - ordinary shares 1 1,600 1,600 1,600 1,600 Issued and paid-up At 1 January - ordinary shares 1 1,200 1,200 1,200 1,200 At 31 December - ordinary shares 1 1,200 1,200 1,200 1,200

23 Reserves

Legal reserve Section 116 of the Public Companies Act B.E. 2535 requires that a company shall allocate not less than 5% of its annual net profit, less any accumulated losses brought forward (if any), to a reserve account (“legal reserve”), until this account reaches an amount not less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution. Fair value changes Fair value changes recognised in equity relate to cumulative net changes in the fair value of available-for-sale investments until the investments are derecognised.


63

24 Business segment information Segment information is presented in respect of the Group’s business segments. The primary format, business segments, is based on the Group’s management and internal reporting structure. Segment assets, revenues and results of operations include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Business segments The Group comprises the following main business segments: SCG Cement-Building Materials

Manufacture and sale of grey cement, ready-mixed concrete, white cement, dry mortar, roof tiles, concrete paving blocks, ceramic tiles, sanitary wares and sanitary fittings. Distribution of cement, building and decorative products of the Group companies through distributors, as well as importing fuel products, waste paper and scrap iron.

SCG Chemicals Manufacture and sale of olefins, polyolefins and other chemical

products.

SCG Paper Manufacture and sale of pulp, printing and writing paper, gypsumlinerboard, kraft paper, corrugated boxes and securities document.

Other Jointly invest with leading companies in other businesses, mainly

agricultural machine, automotive parts and components and steel, as well as other services.

The segment information is used by management to evaluate the performance of segments and to allocate resources. The Group evaluates operating performance based on EBITDA.


64

Information relating to business segments for the years ended 31 December was as follows:

Total assets Revenue from sales EBITDA (1)

2014 2013 2014 2013 2014 2013

(Restated)

(in million Baht)

Consolidated SCG 465,823 440,689 487,545 434,251 66,493 61,265

Business Segments

SCG Cement-Building Materials 168,662 155,711 185,423 174,642 26,683 26,274

SCG Chemicals 183,884 192,063 248,118 209,997 26,142 20,342

SCG Paper 73,987 65,169 64,614 59,135 9,718 9,473

Other 260,437 246,621 86 94 4,083 5,231

Depreciation and

amortisation

2014 2013 2014 2013

(in million Baht)

Consolidated SCG 33,615 36,522 18,062 15,718

Business Segments

SCG Cement-Building Materials 13,180 16,092 7,655 6,254

SCG Chemicals 12,461 11,292 5,779 5,468

SCG Paper 3,448 3,587 4,153 3,836

Other 4,829 5,797 475 160

Profit for the year (2)

(1) Represents profit before share of profit of associates, finance costs, income tax, depreciation and

amortisation and includes dividends from associates.

(2) Represents profit for the year attributable to owners of the parent.


65

Operating results of business segments

SCG Cement-

Building Materials SCG Chemicals SCG Paper

2014 2013 2014 2013 2014 2013

(in million Baht)

statements of financial position

Current assets 53,566 51,935 47,070 51,321 22,969 21,782

Investments in associates and jointly-controlled entities 13,020 12,207 51,006 51,746 1,302 1,093

Other long-term investments 1,481 1,494 3,917 5,978 17 17

Property, plant and equipment 84,274 74,842 75,126 76,244 47,506 40,092

Other non-current assets 16,321 15,233 6,765 6,774 2,193 2,185

Total assets 168,662 155,711 183,884 192,063 73,987 65,169

Short-term loans 56,714 45,033 53,532 50,295 15,197 15,156

Other current liabilities 22,371 21,421 21,800 28,615 6,640 6,287

Long-term loans 1,498 1,037 21,758 27,918 5,900 3,367

Other non-current liabilities 5,354 5,208 2,043 2,445 1,413 1,323

Total liabilities 85,937 72,699 99,133 109,273 29,150 26,133

Shareholders' equity 82,725 83,012 84,751 82,790 44,837 39,036

Total liabilities and

shareholders' equity 168,662 155,711 183,884 192,063 73,987 65,169

Supplementary information

Increase in non-current assets 24,086 31,059 5,059 5,068 11,910 8,795

Intersegment

Other Elimination Consolidated SCG

2014 2013 2014 2013 2014 2013

(Restated)

(in million Baht)

statements of financial position

Current assets 130,249 118,931 (115,856) (108,839) 137,998 135,130

Investments in associates and jointly-controlled entities 17,034 14,149 (13) (7) 82,349 79,188

Other long-term investments 104,300 105,378 (98,252) (98,251) 11,463 14,616

Property, plant and equipment 3,342 3,059 (5,163) (10,395) 205,085 183,842

Other non-current assets 5,512 5,104 (1,863) (1,383) 28,928 27,913

Total assets 260,437 246,621 (221,147) (218,875) 465,823 440,689

Short-term loans 24,887 21,499 (104,707) (98,099) 45,623 33,884

Other current liabilities 2,605 2,692 (3,521) (3,107) 49,895 55,908

Long-term loans 126,220 126,174 (4,950) (4,949) 150,426 153,547

Other non-current liabilities 2,163 1,621 (411) (9) 10,562 10,588

Total liabilities 155,875 151,986 (113,589) (106,164) 256,506 253,927

Shareholders' equity 104,562 94,635 (107,558) (112,711) 209,317 186,762

Total liabilities and

shareholders' equity 260,437 246,621 (221,147) (218,875) 465,823 440,689

Supplementary information

Increase in non-current assets 1,239 3,642 (253) (367) 42,041 48,197

Information from

Information from


66

SCG Cement-

Building Materials SCG Chemicals SCG Paper

2014 2013 2014 2013 2014 2013

(in million Baht)

Information from

income statements

Revenue from sales

External customers 177,226 167,160 247,248 209,211 62,985 57,786

Intersegment 8,197 7,482 870 786 1,629 1,349

Total revenue from sales 185,423 174,642 248,118 209,997 64,614 59,135

Cost of sales (141,402) (132,943) (225,914) (191,787) (52,768) (47,916)

Gross profit 44,021 41,699 22,204 18,210 11,846 11,219

Other income 1,808 3,432 2,127 2,389 493 558

Profit before expenses 45,829 45,131 24,331 20,599 12,339 11,777

Operating expenses (27,077) (23,947) (8,709) (7,746) (6,779) (6,143)

Profit before finance costs

and income tax expense 18,752 21,184 15,622 12,853 5,560 5,634

Finance costs (2,086) (1,460) (2,763) (3,388) (821) (672)

Profit before income tax expense 16,666 19,724 12,859 9,465 4,739 4,962

Income tax expense (3,230) (3,417) (1,236) (1,036) (682) (866)

Profit after income tax expense 13,436 16,307 11,623 8,429 4,057 4,096

Share of profit (loss) of associates

and jointly-controlled entities 539 394 2,795 2,774 (66) 7

Profit for the year 13,975 16,701 14,418 11,203 3,991 4,103

Profit (loss) attributable to:

Owners of the parent 13,180 16,092 12,461 11,292 3,448 3,587

Non-controlling interests 795 609 1,957 (89) 543 516

13,975 16,701 14,418 11,203 3,991 4,103


67

Intersegment

Other Elimination Consolidated SCG

2014 2013 2014 2013 2014 2013

(in million Baht)

Information from

income statements

Revenue from sales

External customers 86 94 - - 487,545 434,251

Intersegment - - (10,696) (9,617) - -

Total revenue from sales 86 94 (10,696) (9,617) 487,545 434,251

Cost of sales (12) (43) 10,665 9,593 (409,431) (363,096)

Gross profit 74 51 (31) (24) 78,114 71,155

Other income 5,783 6,972 (287) (210) 9,924 13,141

Profit before expenses 5,857 7,023 (318) (234) 88,038 84,296

Operating expenses (2,572) (2,376) 185 179 (44,952) (40,033)

Profit before finance costs

and income tax expense 3,285 4,647 (133) (55) 43,086 44,263

Finance costs (1,735) (2,720) 139 47 (7,266) (8,193)

Profit before income tax expense 1,550 1,927 6 (8) 35,820 36,070

Income tax expense 431 492 (251) (176) (4,968) (5,003)

Profit after income tax expense 1,981 2,419 (245) (184) 30,852 31,067

Share of profit of associates

and jointly-controlled entities 2,848 3,378 (8) (7) 6,108 6,546

Profit for the year 4,829 5,797 (253) (191) 36,960 37,613

Profit attributable to:

Owners of the parent 4,829 5,797 (303) (246) 33,615 36,522

Non-controlling interests - - 50 55 3,345 1,091

4,829 5,797 (253) (191) 36,960 37,613


68

Geographical segment The Group has expanded its investment and operating in foreign countries. All significant revenue from sales and non-current assets on the basis of geography is presented in this information. Segment revenue is based on the geographical location of customers and segment non-current assets are based on the geographical location of the assets. Geographical segment information Revenue from sales Non-current assets 2014 2013 2014 2013 (Restated) (in million Baht)

Thailand 298,857 280,048 186,047 171,904 China 33,437 19,898 - - Indonesia 28,889 26,466 13,407 9,796 Vietnam 28,128 23,264 12,570 12,759 Other 98,234 84,575 12,540 7,497 Total 487,545 434,251 224,564 201,956

Major customer

The Group has no revenue from one customer for the amount over 10% of the Group’s total revenue from sales.

25 Other income

2014 2013 (in million Baht) Dividend income from other companies 4,054 4,894 Management fee income 2,143 2,265Interest income from financial institutions 765 1,038 Gain on disposals of scrap and others 712 705 Rental income and royalty fee income 196 205 Income from penalty/delay payment 83 70 Gain from sales of investments and others 34 2,502 Gain from financial instruments - 97 Other 1,937 1,365 Total 9,924 13,141

26 Selling expenses

2014 2013 (in million Baht) Freight, sales promotion and advertising expenses 15,998 14,584 Other 1,315 1,014 Total 17,313 15,598


69

27 Administrative expenses

28 Employee benefit expenses

2014 2013 (in million Baht) Salaries and wages 29,146 26,900 Welfares and others 3,926 3,325 Contribution to defined contribution plans 1,605 1,460 Contribution to defined benefit plans 638 649 Early retirement expenses 41 83 Total 35,356 32,417 The Group has provident fund plans to provide retirement and gratuity benefits to employees. For most of the plans, the benefits made solely by the Group are payable to the employees upon resignation at 5% to 10% of the employees’ salaries, depending on the length of employment. In addition to the above provident funds, since April 1995, the Group has established a contributory provident fund covering substantially all employees. This fund was registered with the Ministry of Finance under the Provident Fund Act B.E. 2530. Membership is voluntary upon employees attaining permanent status. Under the regulations of the fund, members are required to make monthly contributions to the fund at 2% to 13% of the members’ basic salaries and the Group is required to make monthly contributions to the fund at 5% to 13% of the members’ basic salaries, depending on the length of employment.

29 Finance costs

Note 2014 2013 (in million Baht) Interest - Thai Baht loans 7,490 7,188 Interest - Foreign loans 714 509 Interest - Provident funds 14 17 Loss (gain) on exchange rate (643) 688 7,575 8,402 Capitalised as cost of construction in progress 13 (309) (209) Net 7,266 8,193

2014 2013 (in million Baht) Salary, welfare and personnel expenses 18,862 17,463 Outside wages 1,509 1,270 Depreciation and amortisation expenses 1,314 956 Professional fees 1,074 1,022 Supplies, repair and maintenance 1,018 876 Publication 864 1,093 Tax, licence fees and others 691 593 Research and development 368 222 Communication and transportation 281 271 Interest cost of employee benefits 224 208 Provision for share certificates compensation case 42 21 Cost of business acquisition 21 45 Other 1,371 394 Total 27,639 24,434


70

30 Income tax

Income tax recognised in profit or loss Note 2014 2013 (in million Baht) Current tax Current tax 4,745 5,379 Over provided in prior years (25) (172) 4,720 5,207 Deferred tax Movement in temporary differences 248 (197) Income tax reduction - (7) 15 248 (204) Total 4,968 5,003

Income tax recognised in other comprehensive income

Note 2014 2013 (in million Baht)

Actuarial losses - (5)

Gains (losses) on remeasuring available-for-sale investments (412) 1

Total 15 (412) (4) Reconciliation of effective tax rate 2014 2013 Rate

(%) (in million

Baht)

Rate (%)

(in million Baht)

Profit before income tax expense 41,928 42,616 Share of profit of associates and jointly-controlled entities (6,108) (6,546) 35,820 36,070Income tax using the Thai corporation tax rate 20 7,164 20 7,214 Tax rates in foreign jurisdictions 7 13 Income not subject to tax (771) (1,241) Tax privileges (1,445) (1,287) Expenses deductible at a greater amount (160) (83) Expenses not deductible for tax purposes and others 363 474 Tax losses (413) 289 Current tax 4,745 5,379 Over provided in prior years (25) (172)Movement in temporary differences 248 (197) Income tax reduction - (7) Income tax expense 14 4,968 14 5,003

Income tax reduction

Royal Decree No. 530 B.E. 2554 dated 21 December 2011 grants a reduction in the corporate income tax rate for the three accounting periods 2012, 2013 and 2014; from 30% to 23% for the accounting period 2012 which begins on or after 1 January 2012 and to 20% for the following two accounting periods 2013 and 2014 which begin on or after 1 January 2013 and 2014, respectively. Royal Decree No. 577 B.E. 2557 dated 10 November 2014 grants an order to maintain the corporate income tax rate at 20% for the accounting period which begins on or after 1 January 2015.


71

The Group has used a tax rate of 20% in the determining of deferred tax assets and liabilities as at 31 December 2014 and 2013, based upon FAP’s clarification in 2012.

31 Basic earnings per share The calculation of basic earnings per share for the years ended 31 December was based on the profit for the year attributable to owners of the parent and the weighted average number of ordinary shares outstanding during the years as follow:

2014 2013 (in million Baht / million shares)

Profit for the year attributable to owners of the parent 33,615 36,522

Weighted average number of ordinary shares outstanding 1,200 1,200 Basic earnings per share (in Baht) 28.01 30.44

32 Agreements a) Certain subsidiaries have entered into agreements with several foreign companies for the latter

to provide technical information, technical know-how and technical assistance to manufacture licenced products. As at 31 December 2014, the subsidiaries are committed to pay technical know-how fees for a lump sum amount, and royalty fees based on a percentage of net sales of products as indicated in the agreements.

b) Certain subsidiaries have entered into various different long-term agreements with local and foreign companies in order to purchase raw materials, receive services, lease assets, acquire assets, and construct plants and other assets. Additionally, the Group has obtained concession licences from the government and has to comply with conditions specified in the applicable laws.

33 Dividends

At the Annual General Meeting of the Shareholders of the Company held on 27 March 2013, the shareholders resolved to declare total dividends for the year 2012 at Baht 11.00 per share, totalling approximately Baht 13,200 million. The interim dividend was paid at the amount of Baht 4.50 per share to the shareholders entitled to receive the dividends, totalling Baht 5,386 million, and was paid on 23 August 2012. The final dividend was paid at the amount of Baht 6.50 per share to the shareholders entitled to receive the dividends, totalling Baht 7,769 million, and was paid on 25 April 2013.

At the Annual General Meeting of the Shareholders of the Company held on 26 March 2014, the shareholders resolved to declare total dividends for the year 2013 at Baht 15.50 per share, totalling approximately Baht 18,600 million. The interim dividend was paid twice at the amount of Baht 8.50 per share to the shareholders entitled to receive the dividends. The interim dividend for the first half of 2013 at Baht 5.50 per share, totalling Baht 6,569 million, was paid on 29 August 2013 and the interim dividend for SCG 100th Anniversary at Baht 3.00 per share, totalling Baht 3,584 million, was paid on 28 November 2013. The final dividend was paid at the amount of Baht 7.00 per share to the shareholders entitled to receive the dividends, totalling Baht 8,374 million, and was paid on 24 April 2014. At the Board of Directors’ Meeting of the Company held on 30 July 2014, the directors approved to pay interim dividend for the year 2014 at Baht 5.50 per share to the shareholders entitled to receive the dividends, totalling Baht 6,581 million and was paid on 28 August 2014.


72

34 Financial instruments Liquidity risk The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. Credit risk Credit risk arises from the possibility that customers may not be able to settle obligations to the Group as per contracts which may cause financial loss. The Group has a policy to protect this risk by assessing the credit of customers, defining the credit limit, asking for bank guarantees and/or personnel guarantees, credit terms, controlling credit utilisation and reviewing collections. Fair value of receivables which is presented in the statement of financial position is the balances net of allowance for doubtful accounts. Interest rate risk Interest rate risk arises from the changing of interest rates in the market which effects net interest expense. The Group manages debts by using both fixed interest rates and floating interest rates, depending on the market circumstances. The effective interest rates of loans receivable as at 31 December and the periods in which the loans receivables mature were as follows: Loans receivable

After 1 year

Effective Within but within After

interest rates 1 year 5 years 5 years Total

(% p.a.) (in million Baht)Year 2014

Current Short-term loans to related parties 4.75 - 10.00 / 115 - - 115

LIBOR3M plus 2.15

Non-currentLong-term loans to related party 2.00 - - 149 149

Total 115 - 149 264

Year 2013

Current Short-term loans to related parties 4.75 - 10.00 / 146 - - 146

LIBOR3M plus 2.15

Non-currentLong-term loans to related party 2.00 - - 143 143

Total 146 - 143 289


73

The effective interest rates of interest-bearing financial liabilities as at 31 December and the periods in which those liabilities mature were as follows: Financial liabilities

After 1 year




Current

Bank overdrafts and 2.05 - 8.25 12,509 - - 12,509

short-term loans MOR / MMR

from financial institutions LIBOR plus 3.00

Short-term loans 0.50 90 - - 90

from related parties

Long-term loans 2.00 - 7.42 8,115 - - 8,115

from financial institutions MLR minus (1.75 - 2.50)

LIBOR plus (0.1775 - 1.00)

EURIBOR plus 0.65

THBFIX plus 1.30

Finance lease liabilities 3.50 - 8.57 24 - - 24

Debentures 4.00 - 4.50 24,885 - - 24,885

Non-current

Long-term loans 2.00 - 7.42 - 21,993 2,154 24,147


LIBOR plus (0.325 - 0.70)

EURIBOR plus 0.65

THBFIX plus 1.30

Finance lease liabilities 3.50 - 8.57 - 72 - 72

Debentures 3.90 - 4.40 - 126,207 - 126,207 Total 45,623 148,272 2,154 196,049


74

After 1 year




Current

Bank overdrafts and 1.55 - 10.50 / MOR 12,917 - - 12,917

short-term loans LIBOR plus 3.00

from financial institutions SIBOR plus 2.00

Short-term loans 0.75 88 - - 88

from related parties

Long-term loans 2.00 - 5.00 5,073 - - 5,073


LIBOR plus (0.30 - 0.375)

EURIBOR plus 0.65

SIBOR plus (0.375 - 1.00)

Finance lease liabilities 2.00 - 14.85 843 - - 843

Debentures 3.85 14,963 - - 14,963

Non-current

Long-term loans 2.00 - 5.00 - 23,843 3,070 26,913


LIBOR plus (0.30 - 0.475)

EURIBOR plus 0.65

SIBOR plus (0.375 - 1.00)

Finance lease liabilities 3.45 - 14.85 - 460 - 460

Debentures 4.00 - 4.50 - 126,174 - 126,174 Total 33,884 150,477 3,070 187,431

Foreign exchange risk Foreign exchange risk arises from the fluctuation of foreign exchange rates. As at 31 December, the Group’s foreign currency interest-bearing financial liabilities are as follows:

Current

Non-current

Total

2014 2013 2014 2013 2014 2013 (in million Baht)US Dollars 2,107 2,942 6,354 7,343 8,461 10,285 Peso 457 756 219 386 676 1,142 Euro 217 244 435 733 652 977 Dong 620 312 - - 620 312 Yen 12 17 98 113 110 130 Other 92 83 8 - 100 83

Total 3,505 4,354 7,114 8,575 10,619 12,929


75

The Group uses derivative financial instruments to manage its risk on foreign debts. This is in compliance with the policy and guidelines agreed and approved by the Board of Directors of the Company, and there are controls on operating procedures for compliance with the policy. The financial derivatives utilised are forward exchange contract, cross currency swap and interest rate swap to hedge the foreign exchange rate and interest rate risks of short-term and long-term loans as discussed in note 35. Furthermore, the Group also has adequate export and other income in foreign currencies to reduce the impact of exchange rate fluctuations. Fair value Since the majority of the financial assets and liabilities classified as short-term and loans are bearing interest at rates closed to current market rate, the management believes that as at 31 December 2014 and 2013, the carrying amount of the Group’s financial instruments does not materially differ from their aggregate fair value (fair value of debentures presented in note 19).

35 Commitments and contingent liabilities

As at 31 December, the Group had:

2014 2013 (in million Baht) a) Guarantees on loans of non-consolidated related parties 990 1,252

b) Bank guarantees issued by banks to government, state enterprises and private sectors 1,675 1,366

c) Unused letters of credit 1,104 2,620

d) Commitments - for purchase of raw material contracts 96,656 101,031 - for rental and service agreements 3,835 2,070 - for purchasing land, construction and installation of machinery, implementation project and other 27,446 20,676

Commitment for construction and installation of machinery included construction plant in Indonesia, Myanmar and Laos is amounted to US Dollars 657 million, equivalent to Baht 22,801 million for the entire project. However, as at 31 December 2014, there has been construction cost occurred totalling US Dollars 233 million, equivalent to Baht 7,675 million (2013: US Dollars 54 million, equivalent to Baht 1,518 million).

e) Contingent liability for the assessment and others amounted to Baht 141 million (the cases are under the consideration of the Courts) (2013: Baht 141 million), and receiving the notice to adjust net tax losses from the Revenue Department (the cases are under the consideration of the Board of Appeal) of subsidiaries, of which the outcome is uncertain, the Group has not yet recorded such contingent liability in the consolidated financial statements.

f) In the first quarter of 2009, the Company lodged a complaint with the police officers against an ex-employee for the theft (form of ordinary share certificate) and the forgery of 672,000 Company’s ordinary share certificates. In the second quarter of 2009, the Company was notified by the Civil Court that the heirs and the estate administrator of the shareholder whose shares were forged (“plaintiff”) filed a civil lawsuit against the Company and relevant individuals and juristic persons for compensation.


76

In the fourth quarter of 2011, the Civil Court had the judgment that the ex-employee committed a tort against the plaintiff and ordered him to return the shares or pay the cash for shares prices together with interest until fully paid, and the dividend which the plaintiff should have received. In addition, the court also decided that the Company, as the employer, shall be jointly liable to the plaintiff. The Company and the plaintiff had each appealed the judgement of the Civil Court to the Appeal Court. On 29 April 2014, the Appeal Court has made a decision on the case, ordering (i) the ex-employee who committed a tort to return shares of the Company to the plaintiff or to pay the plaintiff the share price at the last trading price of the Company’s shares on the date of payment, which shall not be less than Baht 314.38 per share, together with dividends and an interest until the date of payment, and (ii) the Company, as employer, Thailand Securities Depository Co., Ltd., and relevant persons to be jointly responsible with the ex-employee. Therefore, the Company has recorded the provision for compensation in the consolidated statement of financial position as at 31 December 2014 of Baht 349 million (2013: Baht 307 million). On 23 July 2014, the Company has appealed the judgement of the Appeal Court to the Supreme Court and lodged amendment of the plaintiff’s appellate motion to the Supreme Court on 30 September 2014.

g) The Group had entered into forward contracts and swap contracts with several local and foreign banks to hedge against the risk from foreign investment, payment of borrowings, payment for goods, machinery and equipment purchased, and money received from sales of goods. The details of the contracts are as follows:

Contract amount Swap Loan Currency Equivalent to Baht 2014 2013 2014 2013 (in million) (in million Baht)

US Dollars 226 279 6,729 8,364 The above contracts will be gradually due within April 2020 (2013: due within April 2020).

Contract amount Forward Receivable Forward Payable Currency Equivalent to Baht Currency Equivalent to Baht 2014 2013 2014 2013 2014 2013 2014 2013 (in million) (in million Baht) (in million) (in million Baht)

US Dollars 483 861 15,970 27,172 176 336 6,000 10,730Euro 2 14 76 591 61 13 2,632 543 Yen 29 4 8 1 670 1,876 193 596 Other - - 81 35 - - 17 49Total 16,135 27,799 8,842 11,918

The above contracts will be gradually due within April 2016 (2013: due within December 2014).

h) The Group had entered into interest rate swap contracts with various foreign banks to hedge the risk of interest on foreign loans of US Dollars 196 million (2013: US Dollars 249 million), whereby exchanging floating interest rates based on LIBOR with fixed interest rates from 2.67% to 4.60% per annum (2013: from 2.67% to 4.98% per annum).


77

i) The Company had entered into cross currency swap and interest rate swap contract with a local bank to hedge against the risk in exchange rate and interest rate amounting to US Dollars 213 million (2013: US Dollars 213 million) and to swap interest rate into fixed interest rate at 3.86% per annum (2013: fixed interest rate at 3.86% per annum), which has fair value amounting to US Dollars 212 million.

j) The Group had entered into commodity and freight swap contracts with various local banks and

foreign banks to hedge the risk of price changes amounting to US Dollars 77 million, equivalent to Baht 2,566 million (2013: US Dollars 72 million, equivalent to Baht 2,371 million).

k) A joint venture had entered into the contract for purchasing raw materials from a certain

company in Vietnam with the contract period of 17 years.

36 Capital Management The management of the Group has the capital management policy to maintain a strong capital base by emphasis on planning and determining the operating strategies resulting in good business’s performance and sustained good cash flows management. In addition, the Group considers investing in projects which have good rate of return, appropriate working capital management, maintain a strong financial position and appropriate investment structure as to maintain sustained future operations of the business and to maintain shareholders, investors, creditors and others interest’s confidence.

37 Other On 29 September 2009, the Central Administrative Court ordered 8 governments authorities to order the temporary suspension of the projects or activities representing a total of 76 projects in the Map Ta Phut Industrial Estate and vicinity of Rayong Province. Thereafter, the Supreme Administrative Court and the Central Administrative Court ordered the 12 projects to resume construction. However, the 64 projects were still suspended according to the order of the Central Administrative Court, including 18 projects totalling approximately Baht 57,500 million which mainly are joint ventures projects of SCG Chemicals.

On 2 September 2010, the Central Administrative Court delivered its judgement to revoke permits of the projects, for which such permits were issued after the Constitution B.E. 2550 came into force, and fall within the list of 11 types of serious impact projects issued on 31 August 2010 by the Ministry of Natural Resources and Environment. As a result of the judgement, almost all projects of the Group which are considered as non-serious impact projects are able to continue their operations, except for 1 project of the Group which fall within the list. Around the end of 2012, such project has complied with the paragraph 2 of Article 67 of the Constitution B.E. 2550. The Industrial Estate Authority of Thailand (IEAT) was of the opinion that the project has fulfilled the requirements and accordingly, IEAT has submitted the issue to the prosecutor, requesting the prosecutor to request the Supreme Administrative Court to revoke the temporary suspension order in order to allow the project to resume construction. On 1 April 2013, the prosecutor has filed the petition to the Supreme Administrative Court. Later, in July 2014, the Supreme Administrative Court has revoked the temporary suspension of the project. In October 2014, the Group obtained a permit from IEAT and the project is able to operate as normal. At present, the plaintiffs and the government authorities have already appealed the judgment of the Central Administrative Court to the Supreme Administrative Court.


78

38 Events after the reporting period

a) On 16 January 2015, the Company has sold its entire 10% stake in Michelin Siam Group Co., Ltd. to Michelin Group of France with the proceeds from sales of Baht 2,329 million and recognises a net gain after tax totalling Baht 1,485 million.

b) At the Board of Directors’ Meeting of the Company held on 28 January 2015, the directors

approved the following matters:

1) To submit for approval at the Annual General Meeting of Shareholders, the payment of a dividend for 2014 at the rate of Baht 12.50 per share. An interim dividend of Baht 5.50 per share was paid on 28 August 2014, as discussed in note 33. The final dividend will be at the rate of Baht 7.00 per share, payable to shareholders entitled to receive dividends totalling approximately Baht 8,400 million and is scheduled for payment on 23 April 2015. This dividend is subject to the approval of the Shareholders at the Annual General Meeting to be held on 25 March 2015.

2) To issue 2 new lots of debentures No. 1/2015 on 1 April 2015, not exceeding Baht

30,000 million with one fixed coupon rate until maturity at a market interest rate when issued. The first tranche with three-year maturity in the amount of Baht 15,000 million is to support the operation and investments in 2015. The second tranche with four-year maturity in the amount of Baht 15,000 million is to replace the debentures No. 1/2011 amounting to Baht 15,000 million to be retired for redemption on 1 April 2015. The total amount of the Company’s debentures, including these particular lots, will not exceed Baht 166,500 million.

3) To submit for approval at the Annual General Meeting of Shareholders, the increase

another Baht 50,000 million to be the ceiling of the issuance and offering of debentures, totalling Baht 250,000 million, increasing from the Baht 200,000 million ceiling amount approved at the Annual General Meeting of Shareholders held on 27 March 2013. This is for the purpose of raising fund to support the continued expansion of investment both in Thailand and ASEAN region.

c) On 28 January 2015, the Group has acquired an additional 50% stake in Prepack Thailand

Co., Ltd. (Prepack), a leading producer of flexible packaging products in Thailand, through a share purchase from the existing shareholders. As a result, the Group’s ownership was increased from 22% to 72%, at an investment in the amount of Baht 798 million.

39 Thai Financial Reporting Standards (TFRSs) that have been issued but are not yet

effective A number of new and revised TFRSs have been issued but are not yet effective and have not been applied in preparing these consolidated financial statements. Those new and revised TFRSs that may be relevant to the Group’s operations, which become effective for annual financial periods beginning on or after 1 January in the year indicated, are set out below. The Group does not plan to adopt these TFRSs early.

TFRSs Topic Effective

yearTFRS 2 (revised 2014) Share-based Payment 2015 TFRS 3 (revised 2014) Business Combinations 2015 TFRS 4 (revised 2014) Insurance Contracts 2016 TFRS 5 (revised 2014) Non-current Assets Held for Sale and Discontinued

Operations 2015


79


year TFRS 6 (revised 2014) Exploration for and Evaluation of Mineral Resources 2015 TFRS 8 (revised 2014) Operating Segments 2015 TFRS 10 Consolidated Financial Statements 2015TFRS 11 Joint Arrangements 2015 TFRS 12 Disclosure of Interests in Other Entities 2015 TFRS 13 Fair Value Measurement 2015 TAS 1 (revised 2014) Presentation of Financial Statements 2015 TAS 2 (revised 2014) Inventories 2015 TAS 7 (revised 2014) Statement of Cash Flows 2015 TAS 8 (revised 2014) Accounting Policies, Changes in Accounting Estimates

and Errors 2015

TAS 10 (revised 2014) Events after the Reporting Period 2015 TAS 11 (revised 2014) Construction Contracts 2015 TAS 12 (revised 2014) Income Taxes 2015 TAS 16 (revised 2014) Property, Plant and Equipment 2015 TAS 17 (revised 2014) Leases 2015 TAS 18 (revised 2014) Revenue 2015 TAS 19 (revised 2014) Employee Benefits 2015 TAS 20 (revised 2014) Accounting for Government Grants and Disclosure of

Government Assistance 2015

TAS 21 (revised 2014) The Effects of Changes in Foreign Exchange Rates 2015 TAS 23 (revised 2014) Borrowing Costs 2015 TAS 24 (revised 2014) Related Party Disclosures 2015TAS 26 (revised 2014) Accounting and Reporting by Retirement Benefit Plans 2015 TAS 27 (revised 2014) Separate Financial Statements 2015 TAS 28 (revised 2014) Investments in Associates and Joint Ventures 2015 TAS 29 (revised 2014) Financial Reporting in Hyperinflationary Economies 2015 TAS 33 (revised 2014) Earnings per Share 2015 TAS 34 (revised 2014) Interim Financial Reporting 2015 TAS 36 (revised 2014) Impairment of Assets 2015 TAS 37 (revised 2014) Provisions, Contingent Liabilities and Contingent Assets 2015 TAS 38 (revised 2014) Intangible Assets 2015 TAS 40 (revised 2014) Investment Property 2015TFRIC 1 (revised 2014) Changes in Existing Decommissioning, Restoration and

Similar Liabilities 2015

TFRIC 4 (revised 2014) Determining whether an Arrangement contains a Lease 2015 TFRIC 5 (revised 2014) Rights to Interests arising from Decommissioning,

Restoration and Environmental Rehabilitation Funds 2015

TFRIC 7 (revised 2014) Applying the Restatement Approach under TAS 29 (revised 2014) Financial Reporting in Hyperinflationary Economies

2015

TFRIC 10 (revised 2014) Interim Financial Reporting and Impairment 2015 TFRIC 12 (revised 2014) Service Concession Arrangements 2015 TFRIC 13 (revised 2014) Customer Loyalty Programmes 2015 TFRIC 14 TAS 19 (revised 2014) - The Limit on a Defined Benefit

Asset, Minimum Funding Requirements and their Interaction

2015

TFRIC 15 (revised 2014) Agreements for the Construction of Real Estate 2015 TFRIC 17 (revised 2014) Distributions of Non-cash Assets to Owners 2015 TFRIC 18 (revised 2014) Transfers of Assets from Customers 2015 TFRIC 20 Stripping Costs in the Production Phase of a Surface Mine 2015 TSIC 10 (revised 2014) Government Assistance - No Specific Relation to

Operating Activities 2015


80


year TSIC 15 (revised 2014) Operating Leases - Incentives 2015 TSIC 25 (revised 2014) Income Taxes - Changes in the Tax Status of an Entity or

its Shareholders 2015

TSIC 27 (revised 2014) Evaluating the Substance of Transactions Involving the Legal Form of a Lease

2015

TSIC 29 (revised 2014) Service Concession Arrangements: Disclosures 2015 TSIC 31 (revised 2014) Revenue - Barter Transactions Involving Advertising

Services 2015

TSIC 32 (revised 2014) Intangible Assets - Web Site Costs 2015

The Group has made a preliminary assessment of the potential initial impact on the consolidated financial statements of these new and revised TFRSs and expects that there will be no material impact on the consolidated financial statements in the period of initial application.

Date post:	05-Aug-2019
Category:	Documents
Upload:	lamthuan
View:	223 times
Download:	0 times

The Siam Cement Public Company Limited and its...

Documents